Expanding internationally can be a daunting prospect, even in ‘normal’ times, so a period of global political uncertainty topped by a worldwide pandemic, might not seem the opportune time to think about international growth. However, while the approaches you take might need to be adapted, there is no need to pump the brakes. And whilst we’re unlikely to be entering a period of total calm, there are reasons to be optimistic. The US presidential election (despite Trump’s claims otherwise) has been resolved; Brexit has happened and a no-deal avoided; and whilst the pandemic and its related restrictions roll on in 2021, there’s light at the end of the tunnel with the vaccine roll-out underway.
With 84% of growth companies looking to expand internationally over the next 12 months, according to ECI’s Growth Index, we wanted to share the key lessons we’ve learned across our portfolio in the last year, on growing overseas in the current climate:
1. How to build out international clients in a pandemic
In business sometimes you just need to ‘get on the plane’ go ‘face to face’ and ‘press the flesh’. Well, so the old adages might go, but at the moment these options are at the worst, illegal, and at best, unwise.
That can make growing organically overseas difficult. Will you be able to win new customers if you can’t even meet them? The good news is that the shift to remote meetings means everyone is pitching on a fairly level playing field now, and your people won’t have to fly around the world in the hope of winning new business, which means you can dedicate more time to prospects and accounts.
Will Truman, Group CEO of Imagesound, one of the world’s leading providers of audio-visual solutions, has invested in the Group’s global operations in Shanghai and North America in recent years. 2020 has been a record year for organic site growth of the group with North American operations in particular adding more than 5,000 sites to its technology platform under subscription service. He says that the way to grow through the pandemic is by, “having an unrelenting focus on exceptional customer service, even in trying circumstances.” Treating customers well during difficult times will not only create customers for life, but also referrals for further growth.
In order to achieve that you need to train all your staff for the remote world, not just for pitching but also in delivering a service to clients which is as good, if not better, than pre-pandemic times. It’s harder to win clients, so the standards you set have to be very high.
So the good news is that companies are still successfully delivering big new client wins, domestically and overseas. Will does point out that in the long term the best way for international success is to have boots on the ground, but 2020 has demonstrated that it is still possible to grow organically overseas remotely, so there is no need to hold off in the interim.
2. Hiring internationally in 2020
To make overseas hires, it’s important to be able to lean on an international recruiter who truly understands the market and what will appeal to potential candidates. Spend time ensuring your messaging is on point – convincing a candidate to join an overseas business is all about them understanding the opportunity.
That being said, where we’ve seen most success is exporting talent to new international markets. Bringing people from the ‘mothership’ means you de-risk the talent process. When ECI portfolio company, MiQ, expanded into the US, one of the key things for CEO, Gurman Hundal, was making sure that the values they had built up in the UK transferred over to the US. For him that meant moving to New York to get the office up and running. He says, “You need to maintain the right balance of continuity and localization, bringing some team members and your cultural core values from your base location to your new location, then add in local talent and adapt to meet local expectations. There’s no hard and fast rule, but I think aiming to keep your business 70% consistent and allowing for 30% localization is a fair goal.”
The pandemic will add complications to people moving country, and not everything will be possible immediately. But, get the legwork in place now and sell it into the relevant people, for things to move full steam ahead as and when the rules allow.
3. Scoping and integrating acquisitions
We helped our portfolio make 10 acquisitions in 2020, half of which were international, so we know there are plenty of opportunities for overseas M&A even in the current climate.
Ruth Eagle, Origination Manager at ECI who helps portfolio companies investigate new markets for acquisitions, says, “It is always best to throw the net wide when scoping out new markets for M&A opportunities. Having a full market view informs your strategy and pricing as you know what is out there and you can find opportunities you wouldn’t have otherwise.” This is especially true when looking at international markets, as you may not have access to all the information you need. In that case she says, “It’s best to adopt a glass half full approach. You don’t want to filter out too many companies due to assessing incomplete data.”
When mapping the US market for Moneypenny, the world’s leading outsourced communications provider, we narrowed down from about 750 businesses to 60 businesses we wanted to reach out to, by assessing location, size and services provided. In that instance it led to Moneypenny acquiring VoiceNation and Ninja Number in March 2020 in an off-market deal, taking international group revenues from about 5% to 25%.
Once completed, there is a new challenge of building relationships and integrating from afar. A lot of the work to understand this should be done before the acquisition: how similar are the firms in culture and values, will the tech and communication platforms merge easily, how will the leadership model change and integrate? Understanding these questions early will help. Joanna Swash, CEO of Moneypenny, stated that part of the appeal about the VoiceNation and Ninja Number acquisition was that culturally it was very similar with a direct and open leadership model. Both businesses used the same communication tool, Workplace by Facebook, so it has made it easier to integrate from afar. Joanna says, “Invest time in ensuring you acquire a company that not only meets your business objectives but that is also heavily aligned to your own culture.”