Global Expansion Is a Key Goal for North American Mid-Market Firms

Global expansion is a growing driver for many middle-market companies, according to “Business Without Borders: International growth at mid-cap companies,” a report released this month by Mergermarket Ltd. on behalf of Mazars Group.

Mergermarket surveyed 150 senior decision-makers at companies with annual revenues between €250 million (US$268 million) and €2.5 billion (US$2.69 billion), and found that more than half (56%) had international growth as a key part of their company’s strategy. A similar amount also planned to make an acquisition in the next three years.

“Mid-cap companies worldwide experienced a strong end to 2014,” Mazars partner Laurent Inard said in a public statement. “As the world becomes increasingly global, most are looking at ways of driving growth through expansion into new international markets.”

“When asked for the reasons behind their success, respondents were most likely to cite strong economic growth and stability in the target market.”

North American survey respondents that had expanded outside their borders had the most success within their own continent (e.g., U.S. firms expanding into Canada, or vice versa) as well as in the UK and in India. Similarly, respondents from other regions also had the most success expanding either into neighboring countries or into large international markets that have low barriers to entry.

Companies based in the Asia-Pacific market were most likely to cite China and Singapore as successful expansion locations, followed by the U.S. and the UAE. For companies based in EMEA, nearly half (48%) said that expansion outside their own region proved to be the most successful, followed by Asia-Pacific and North America by equal measure.

When asked for the reasons behind their success, respondents were most likely to cite strong economic growth and stability in the target market (63%), followed by a large potential customer base (57%), skilled local workforce (37%) and good infrastructure (37%).

Many respondents said the most challenging markets for expansion where those in which they faced regulatory and legal hurdles (54%), political hurdles/instability (40%), cultural barriers (39%), low economic growth/instability (37%) and a difficult tax regime (37%).

North American respondents were most likely to say they had faced challenges in Japan, followed by Australia and China.

“Cultural barriers can affect effectiveness; without proper coordination and a collective business culture, there are added complications and more stress in achieving performance,” one U.S. operations director told Mergermarket.

Respondents from Asia-Pacific were most likely to select China as the most challenging expansion market, while those from EMEA were most likely to say the U.S. and India had been most challenging, followed by China and the UK.


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