Widely varying country-specific requirements, along with insufficient time to capitalize and operationalize a legal entity, can delay the buyer from being able to effectively operate in a jurisdiction. Forty-four percent of sellers say it was a challenge to capitalize and operationalize a legal entity in their most recent divestment. In many countries, sellers may face a 60-, 90-, or 120-day review requirement to be met before they can put capital into a local entity.
Regulatory requirements can include antitrust approvals, business licenses, capitalization of new legal entities, registration of products, labor requirements and obtaining various tax IDs. Many of these activities must occur in a specific sequence, can be lengthy and can change based on rule-making bodies in each country and locality.
Actions taken in successful divestments include:
- Identifying key regulatory requirements in every current and anticipated jurisdiction, by leveraging local subject matter experts
- Prioritizing the countries of significant importance based on a combination of size and importance to the day one operating model (i.e., location of key facilities)
- Building out the proper timeline to address activities such as product registration, product labeling, business licenses, tax IDs, labor requirements and contracting with third-party service providers