The next wave of mergers and acquisitions will require multinationals to consider fluid models that address efficiency, cost reduction, risk management, and compliance.
One of the day-to-day challenges for multinational companies when dealing with regional subsidiaries is that, over time, and left to their own devices, entities in different countries without a central governance framework can adopt their own set of processes for managing legal, governance, and reporting matters.
One result of such decentralized entity management processes is that general counsels (GCs) and their teams, who are already facing mounting workloads and responsibilities, are forced to spend an unnecessary amount of time gathering and reporting data from disparate sources.
Mergers and acquisitions, as well as more organic expansion, can add to this complexity, increasing time and resource pressures on GCs. This was partly endorsed by our recent research with 300 GCs of multinational companies within the Americas, Asia Pacific, and Europe, which found that most plan to set up new global subsidiaries at the same volume in 2024 as in 2023.
Among other findings, our research also found that a majority (58%) of firms are looking to accelerate their digital transformation strategies in the next 18 months, leading to even more attention needing to be given to the set up and maintenance of global entities.
The role of corporate service providers
Corporate service providers can deliver a global framework for entity management that enables multinationals to adopt a highly centralized model. This helps companies address the challenges caused by non-standardized data management and business processes.
However, an increasing number of multinationals are now seeking a framework that’s anything but a one-size-fits-all model, and that meets their changing needs over time.
A multinational may want to centralize the management of the majority of their foreign entities, for example. But they still want to manage the remainder over a period of time internally—for a variety of business reasons—including tax-related matters, or complexities relating to changing personnel. Once these matters are addressed, the multinational needs to have the ability to bring an entity into a global service delivery framework. Conversely, they may want to move an entity out of the framework for a set timescale.
Five reasons to consider a collaborative model for entity management
By adopting the right platform, multinationals can have the best of both worlds—a standard set of processes, and data sets that can be applied to entities when needed. Here are five reasons why this model works.
- Consistency and standardization: Simplifying and standardizing data sets across all global entities means that GCs and their teams establish a single source of the truth—a central data repository that remains the same however it’s interrogated by different systems.
- Efficiency and resource optimization: Multinational companies achieve more transparent and predictable costs when using a single global services provider to support entity management processes.
- Enhanced control and oversight: Multinational companies can achieve greater certainty and confidence in meeting local regulatory requirements by using a flexible global services provider with expertise in multiple territories.
- Scalability and adaptability: Standardizing processes means multinational companies can establish a template for adoption when they set up new subsidiaries in the future, delivering value more quickly in line with business goals. They can also move entities in and out of global frameworks as needed.
- Access to specialization: A global entity management platform from a corporate services provider can be rolled out much faster and more effectively than if multinationals try to build it themselves.
While multinationals seek all of the above, the service model that works best and addresses these requirements still needs to be bespoke and adaptable to changing needs over time.
How CSC can help
CSC works with multinationals to investigate how their current operations work, and how they can achieve a fluid and bespoke model unique to their organization. Our flexible framework can be adapted to the needs of any multinational.
We pride ourselves on understanding the current shape of our clients’ entity portfolios and how their requirements will change going forward. Our clients trust us to match the services that we offer with their business needs, and we continue to create efficiencies throughout our relationship with them.
CSC’s Global Subsidiary Management solution harnesses the power of CSC Entity ManagementSM, our market-leading technology platform to support centralization and the complete oversight of critical legal entity data—reducing uncertainty and risk. Our technology combines with a centralized service model that allows us to deliver our Global Subsidiary Management solutions in 140 jurisdictions around the world.
Interested in finding out more? Download and read our latest General Counsel Global Barometer 2024 report.
