Operating internationally through the right legal structure of a business
Whether you’re looking to develop your business in a foreign market, first of all you need to choose the right legal structure of a business. When we say so, we mean you need to get the most appropriate entry strategy, consider the advantages and disadvantages associated with each option, and set up accordingly your own structure. Moreover, the law system in place in the foreign market is always something you need to be aware of.
As entry strategies, you may choose from:
- licensing a foreign entity,
- entering into a partnership with an existing entity in the target market,
- setting up a new entity in the target market either alone or in partnership with another local entity, and
- acquiring an existing entity in the target market or merging with one.
Our lawyers may help you at any stage
At Palazzo law Boutique we can:
- perform a preliminary analysis of the law in place in the target market;
- choose the most appropriate entry strategy, whether contractual arrangements or equity structures;
- negotiate, draft, conclude domestic and complex international arrangements;
- set up the legal structure of a business;
- develop a tax plan;
- look for funds and financing retrieval for your business;
- deal with intellectual property matters;
- obtain any other support for developing and managing the business.
Benefits of a legal structure of a business at international level
Seeking international growth as an importer-exporter implies facing a variety of new environments and new ways of doing business. Some of the specific advantages you might have once chosen setting up a legal business structure in a foreign market are outlined as follows:
- Extension of the sales life of current products or services. If a product or service is getting obsolete in your domestic market or its demand is not enough to expand your sales, you should think about setting a business abroad up. In doing so, you might be able to introduce your products to other markets with a higher demand. However, choose a market that offers opportunities and whose customers desire to buy your product or service. Only so, you will be able to obtain a new source of revenue.
- Chances to overcome some government’s restrictions which are in force for the production-distribution of certain commodities.
- Fewer business risks.
- Exploiting technological improvements and know how.
Whilst going global presents various advantages, it is also accompanied by a lot of aspects you should take into account. The mechanism of carrying out business internationally is long and complex. As an example, being well established and profitable in a domestic country is a must.
The legal structure of a business should always reflect the following factors:
If you want to run successfully your business abroad, do not ignore the cultural differences that shape the marketplace. Do your research about the country, get in touch with local entrepreneurs and build a relationship with them. Therefore, analyse your target customers and find out the reasons for which they should be attracted by your product or services.
Be aware of the political stability of the country you are planning to start/extend your business in and therefore monitor political development. By doing so, you can take appropriate action at any time. International terrorists, difficulties in moving funds within the country and interference in the ongoing operations, are only an example of the risks that can be occurred.
Assume that the business will be carried out in English, but be aware that your audience will not be bilingual. As a result, you should familiarise with the local language of the foreign country as well as provide the information of your products or services according to it. Bring your own interpreter whenever required and do not rely on the information provided by other parties.
Intellectual property is regulated by the law of the country you decide to invest in and represents an important asset. Therefore, be aware of any regulations that may affect your business in the foreign market.
By going global, you will be involved in several contracts, both domestic and international, so it is important fully understand the fundamental issues regarding them.