Rapid International Growth

High Street Partners helped this fast growing Boston area network equipment maker enter 16 overseas markets in 18 months. In addition to supporting the client’s recurring business activities overseas, High Street Partners has also provided advisory services to address the challenges and opportunities associated with such accelerated expansion. Our client is now preparing to file an IPO, secure in the knowledge that its international operations, currently involving more than 35 overseas employees, are prepared to meet the more stringent compliance requirements and controls required of public companies.

Business Challenge

• Identify an appropriate, flexible international corporate structure based on the company’s growth plans overseas, suitable for both present and future needs.
• Coordinate and manage simultaneous entity registrations to accommodate the immediate hiring of a large number of international employees in multiple locations.
• Review the specific activities of the employees in-country to determine whether the current entity structure was appropriate, and whether employee activities would trigger any permanent establishment (PE) concerns in countries with a representative presence.
• Manage all entity setups, required registrations with local authorities, and ongoing operational and compliance support.
• Advise on the many human resource considerations that occur with such rapid expansion, including:
  • Dealing with local employment advice and contractual matters in all countries employing resources
  • Advising on tax efficient compensation structuring and market norm employee benefit provision
  • Advising on the statutory employee insurances required in each country and helping to arrange for these policies to be put in place
• As each new entity set up was completed, High Street Partners assisted with the integration of payroll and accounting processes, to ensure consistency with the global accounting practices being provided in other international locations, and to ease the task of consolidating the overall financial statements at corporate.
• Provide advice on granting stock options to international employees for this soon to be public company, ensuring that such options comply with local requirements and take advantage of various tax effective strategies available in certain territories.
• Advise on specific expatriate tax and immigration matters related to US employees assigned to overseas locations.

High Street Partners' Solution
Based on this client’s current needs, HQ staffing, projected growth, and expected overseas employee activities, we proposed the set up and ongoing management of two subsidiary hubs, one in the UK to serve Europe, and one in Hong Kong to serve the Asia/Pacific region. We proposed an additional subsidiary for Japan to serve the needs of that market.

Effective Outcome
This flexible framework has enabled the company to expand on an as-needed basis, keeping the number of subsidiaries and their associated administrative and compliance costs to a minimum. Multiple entity registrations are managed easily, as new territories hang from one of the parent hubs. All 16 international operations roll up into just 3 subsidiaries, significantly reducing the HQ finance team’s time spend during the monthly consolidation and closing processes.

By recommending the setup of these three subsidiaries as cost-plus organizations supporting the US parent, consistent with the operational activities being undertaken within them, HSP simplified the funding process as well. The HQ team remits one single monthly wire to each of the 3 locations, paying the amount invoiced by the subsidiaries on the monthly cost-plus service fee. The local subsidiaries then disburse the funds as required throughout their operation.

Leveraging High Street Partners' resources and experience has significantly reduced the time, effort and strain that would otherwise have fallen on the headquarters finance and HR resources. HSP is an effective extension of their team, providing support for all recurring and non-recurring activities associated with the client’s extensive international operations, leaving the HQ team to focus on filing its IPO and other strategic areas.