International expansion poses bigger legal burdens

International expansion is proving to be a more significant legal and compliance execution challenge compared to mergers and acquisitions (M&A), with a striking 74% of senior cross-border professionals acknowledging market entry as their primary concern. In contrast, only 28% highlighted M&A transactions as a burden. This insight comes from a recent report by CSC, a leading provider of global business administration and compliance solutions. The organisation's study surveyed 200 senior professionals globally, delving into their experiences with cross-border transactions, expansion, restructuring, and compliance tasks.

The challenges associated with international expansion extend beyond the mere act of executing deals. A considerable 71% of respondents indicated that ongoing entity governance and compliance requirements present operational complexities when establishing and maintaining a presence in multiple jurisdictions. One primary factor contributing to this complexity is fragmented entity and ownership information. More than half (54%) of those surveyed reported frequently having to redo work due to missing or outdated information, while 44% encounter this issue occasionally.

Myrna Reijnders, market leader for the Americas at CSC, articulated the nuances of this complexity, stating that “the real complexity of international expansion often comes after the initial decision to enter a market.” She further explained that once a company has entered a new market, numerous tasks need meticulous attention, including setting up entities, appointing directors, opening bank accounts, and ensuring compliance across jurisdictions, each of which operates under different regulations. “That is where small gaps in information can quickly become delays,” she emphasised.

Delays caused by issues such as incomplete entity, compliance, or ownership information can be significant. Half of the respondents noted that these issues could add one to two weeks to cross-border projects, with 16% experiencing even longer delays of three to four weeks. Notably, nearly half (48%) identified bank account openings or Know Your Customer (KYC) checks as additional sources of rework and unexpected legal effort.

To mitigate these challenges, organisations are taking proactive measures to tighten ownership structures and standardise processes. Approximately 66% of firms are now designating a clear owner for cross-border tasks, while 60% are creating standardised information packs to expedite closure. Furthermore, 53% are involving compliance teams earlier in the process, with 44% opting to outsource more specialised tasks and 43% investing in entity management technology.

Ian McConnel, Chief Legal and Risk Officer at CSC, highlighted the role of technology in streamlining these processes. He explained that “for in-house teams, the challenge is often less about understanding what needs to be done and more about coordinating it efficiently across multiple markets.” He further noted that technology offers improved consistency and visibility while outsourcing enables teams to harness expertise and capacity at critical stages. This combination can significantly reduce duplication and facilitate smoother cross-border execution.

These findings underscore the challenges of navigating the legal and compliance landscape of international expansion. As businesses seek to grow in new markets, the emphasis on securing accurate information and standardised processes becomes ever more critical. For those interested in a deeper exploration of these challenges and strategies, CSC's report, The Cross-Border Readiness Gap: Navigating the Legal and Compliance Burden of International Expansion, is readily accessible for download.