International growth opportunities and how partnering with PE can support businesses to navigate the challenges and create significant scale and value

When a high growth business is ready to expand internationally, there are several areas where an experienced investment partner can provide support.

This year, GCP Partner, Richard Shaw was invited to be part of various discussion panels at BVCA events.  Including a round table event with the Department for International Trade, where he discussed the opportunities and challenges of international growth and how private equity investors can provide strategic support.

What are the typical challenges that businesses can face?

1. Identifying and prioritising the right locations
2. Ensuring appropriate talent is in place to support the new business operation from both a local leadership and sales and delivery perspective
3. Building profile and market presence, accessing, and implementing appropriate marketing and business development resources and activities
4. Navigating local culture, language, and commercial trading dynamics
5. Dealing with compliance, taxation, treasury, and foreign exchange complexities
6. Silo operations/mentality and lack of remote visibility, including difficulties tracking performance against an agreed business plan, and quickly “course correcting” if needed.

How to handle those challenges

Richard emphasised that whilst these challenges can exist, in his experience there can be significant and exciting new growth opportunities from international expansion, opening larger markets for existing products and services and driving significant revenue growth and shareholder value through international scale.

To make the best of these opportunities, a balanced approach is often wise and key recommendations include:

1. Don’t underestimate the support of existing customers: cross selling throughout the wider international group of an established customer can be the ideal way to establish a foothold in a new international market, avoiding the “build it and they will come” risk.
2. Once foundation customers are secured and initial traction achieved, leverage established partner or other networks to build profile: working alongside major technology vendors can be a good way of driving sales leads through an established partner channel or leveraging the networks of trade organisations or the UK Department for International Trade, for example, can be a good way of making connections, hosting events “on the ground” and building credible and trusted local business development networks.
3. Take appropriate advice to ensure local compliance, regulation and reporting requirements are met: subsidiary company formation can be straightforward but there are a host of other factors to consider. Local commercial and employment laws, taxation regimes, foreign exchange treasury management and corporate reporting requirements may all be new and different and therefore getting trusted advice from experienced professionals is paramount to avoid future liabilities and pitfalls.
4. Ensure the core business platform is ready: this includes senior leadership bandwidth to spend time leading the new international initiative, being able to second key individuals from the UK business to the new location to help ensure the core business culture travels over and that appropriate systems and processes are in place to ensure appropriate visibility and remote management and control.
5. Identify and recruit high quality, entrepreneurial talent, locally: finding local management and sales and delivery teams with the right balance of experience, technical capability, entrepreneurial spirit and appetite to “build a business” in the new location is key.
6. Consider M&A as a significant growth accelerant: acquisitions in new territories can be an effective route to speeding up international expansion, but team and cultural alignment, strategic fit and appropriate access for relationship building, due diligence and post deal integration planning during a deal process are all critical success factors.

Using the GCP Growth Toolkit and Growth Network to support our portfolio

International expansion is a core element of our investment approach, and we have extensive experience of providing strategic support to help the teams we work with successfully implement their international growth plans.

At the Department of International Trade round table event Richard was also joined by Anthony Young CO-CEO at Bridewell.

Since our investment partnership began in 2021, we have supported Bridewell to expand into North America. To do this, we have assisted with company formation, introductions to local advisors, helped with local recruitment, directly introduced new business opportunities (already leading to a multiyear, managed security services contract) and have commenced hands on M&A support to engage with acquisition targets.

Since our investment partnership began in 2018, numerous international expansion activities have been supported:

• Playing a hands-on role to secure the off-market acquisition of 4Site, a leading network survey and design business based in Ireland
• Expansion of local teams in France and the Netherlands and expansion into Germany, Italy and Spain.
• Investment and support for the development of a new US subsidiary, seconding key engineering leaders, recruiting local talent, and developing a new network monitoring service, leading to a second NOC in the USA.

Read about the other high growth businesses we have supported with their international grow plans here. (insert link Outstanding Growth Companies – GCP (growthcapital.co.uk))

Read more about our Growth Toolkit and Growth Network.