FDI checklist

Broadly speaking, there are three routes to investing internationally: set up a wholly owned subsidiary, invest in an existing business or set up a company in partnership with an existing business.

The first and most important question to answer is why you want to invest at all.

A wholly owned subsidiary offers the advantage of you being in total control but possibly the disadvantage of not being in any networks and, whilst it may be better resourced, is otherwise like a start-up. Investing in an existing business, depending on the proportion of equity that you buy, will mean that you will need to share the decision making. However, it will also mean that you instantly become part of the target company’s networks and value chains. A joint venture has the advantage of utilizing the partner’s networks and may benefit from seconded staff, but also requires joint decision making.