Norway is a small and open economy dependent upon foreign direct investments. How can Norwegian companies promote their strengths to enhance attractiveness internationally? How can companies ensure that they are noticed by potential partners or larger firms? And how can Norwegian companies attract the talent and competencies required to compete internationally?
Having focused upon sound policies to attract businesses to Norway in our 2018-19 Membership Guide, AmCham sat down with M&A experts at Thunderbird School of Global Management and talent management specialist Mercer to explore how companies can grow and strengthen through mergers, collaboration and acquisitions.
People
“At Thunderbird, we believe small and/or entrepreneurial firms need the three P’s to be noticed by larger firms or potential partners: Presentation, Prediction and People. Charts and graphs, though, aren’t enough to attract a larger firm or potential acquirer.”
“While we may have a powerful presentation with solid predictions of our growth and value, investors and partners always look at a start-up or small firm’s people.”
“Thus, what kinds of talent you have – from the most junior to the most senior – is critical. In fact, many potential partners will often thoroughly review the biographies of a firm’s leaders long before reviewing financial projections.”
Henry Zinglersen, Thunderbird
“Acquirers invest in a firm’s people – so how you train, develop, and lead your people is a critical component of success in the entrepreneurial space,” Thunderbird’s M&A specialists Henry Zinglersen and Paul W. Thaurman explain.
Per Myklestu, CEO of Mercer Norway, agrees and argues that, based on those facts, Norwegian companies are already at forefront of attracting international investments.
“Globally, Norway is associated with a high-cost of living. Although correct, when looking at how Norwegian companies compensate their employees, we experience that the higher you go within a company’s hierarchy, the cheaper the employee, compared to international wage structures. Hence, executives, leaders and highly educated employees are comparatively less expensive in Norway.
“Consequently, this means that high-competence industries and companies have substantially better terms in Norway, which should be a motivating factor for large companies looking to expand their portfolios,” Myklestu explains.
Innovation Friendly
While competent employees are a key component to generating growth, Myklestu believes that the structural model of the Norwegian company is a genuine advantage to stimulating innovation, collaboration and development.
“In the Nordics, and particularly in Norway, the flat company structure helps the development of new ideas. The road to the top is shorter, which means that it is easier for employees to get their ideas heard.”
Paul W. Thaurman, Thunderbird
“Additionally, it is customary for Norwegian employees to have significant freedom and responsibility, where the employer creates an environment enabling their employees to grow and develop. This further promotes innovative ideas, and we have seen several examples of niche companies taking an established idea and existing skills into a new market,” he says.
According to Zinglersen, this is a factor that should help to attract interest from larger, international companies.
Acquiring firms want to see a management team that can take responsibility and ownership, while building a solid culture of collaboration with employees across the organization. They want to be confident in the projections and predictions that a management team creates, and to be persuaded to partner or invest based on how the expanding firm presents its value proposition,” he explains.
A Laboratory for Emerging Business Ideas
It is firmly documented that Norway is well ahead in terms of digitalization and productivity. In fact, Time Magazine has ranked Norway the third most productive country in the world.
According to Myklestu, these factors could enable Norway to use existing world-leading expertise in natural resources related fields like aquaculture and offshore to define new industries for future growth.
Per Myklestu, Mercer Norway
“We should highlight how having a daughter company in Norway could be utilized as a test lab for new ideas and digital implementations. We are a small country, which makes it easier to conduct experiments here, before potentially implementing them globally.”
“This will further generate growth in industries in which we have previously been successful. In return, this will boost start-ups and entrepreneurial initiatives, as well as allow new, exciting and profitable industries – such as the healthcare industry – to grow,” Myklestu says.
While Thaurman emphasizes the importance of investing in direct marketing to profile Norway’s industry-specific expertise and capabilities, he says it is equally important to offer incentives for outside firms to invest in the Norwegian market.
“Promotion of favorable tax treatments, labor portability and access are important factors, alongside creation of incubators, where joint ventures — especially those involving cross-border alliances – can experiment with new ideas and explore new business areas and markets with open access to senior business leaders and market testing capabilities.”
“Thus, by attracting foreign investors with direct appeals and then allowing them to access local labor markets, test ideas using local laboratories and consumer bases, and subsequently partner, merge, or acquire local firms when products and services show promise, Norway can be seen as not only a great investment but also a great laboratory in which to test new, emerging business ideas,” Thaurman says.
As a final caution, Zinglersen points to the importance of getting the collaboration or integration with foreign investors right from the beginning.
“The flat organizational structure and strong ownership amongst Norwegian leaders and employees often causes significant challenges if not managed well. Mergers, acquisitions, and joint ventures with foreign investors coming into Norway too often fail to deliver their expected value, due to poor integration of people, team cultures, and organizations.”
