Torben Luth is a partner with JZ International, a London-based investment group. The firm, which also has a Madrid office, has completed over 35 transactions in Europe since 2002, primarily with family-owned businesses. Luth is responsible for sourcing deals and building relationships with target companies and brokers prior to transactions and after closing.
Q. WHAT HAVE YOU FOUND IS THE GREATEST CHALLENGE TO CROSS-BORDER INVESTMENT?
It’s getting to know the ideal target. When entering a new country, either through proprietary research or with an intermediary such as a banker, firms will find that potential targets often fall into one of three categories:
- The “eager beaver,” which is either in financial trouble, believes a foreign buyer will pay above market price or is not attractive to local buyers for other reasons.
- The “information collector,” which is not interested in selling but will not disclose that as it gathers as much business intelligence as possible.
- The “thinker,” which is an ideal target. The company is not in a rush, preferring to collect information in order to make the correct choice with the future in mind. The challenge for buyers is first identifying the “thinker,” then finding the best way to approach the seller while keeping a lookout for cultural issues that could derail a deal.