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Fixed Income

Cross-Border Origination: Tax Reform and Other Considerations

February 2018 - 7 min read

Financing and structuring cross-border deals can be challenging, particularly in light of the U.S. tax reform. In today's interconnected world, finding the right financing partner is key.

In recent years, private equity firms have begun casting a wider net, looking outside of their core markets in an effort to find attractive opportunities. In many cases, this means targeting larger (or smaller) transactions or new geographic regions. The increasing prevalence of cross-border transactions is a result of multiple factors including intensified competition in local markets—largely a result of the industry’s record amount of global dry powder—as well as the fact that many businesses now maintain a global presence.

While foreign markets may offer accelerated growth at attractive valuations, cross-border deals are not without challenges. In this paper, we discuss the inherent complexities and seek to illustrate how the right financing partner can play a critical role in helping private equity access the increasingly wide set of cross-border opportunities.

The Complexities of Cross-Border Deals
The potential benefits of pursuing cross-border opportunities are fairly well known among private equity firms and a key reason many funds are looking to expand their reach. As mentioned above, many sponsors are finding increased competition in their domestic markets fueled by record fundraising in the private equity asset class combined with lofty valuations. Looking beyond their domestic markets can give sponsors access to a larger universe of deals, potentially enhancing their ability to deploy funds and capitalize on opportunities that generate attractive returns. Also, private equity managers increasingly look to create value by transforming domestic businesses into multinational platforms with enhanced ability to compete in global markets.

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