The U.S. is Canada's largest trading partner. Whether Canadian businesses are well-entrenched in the U.S. market or are looking to enter that market, they can benefit from the expertise and vantage point of an American bank.
“An American bank can provide a different perspective and services that a Canadian bank may not be able to provide,” said Bank of America Merrill Lynch Senior Vice President Peter Schwab.
Figuring out the best strategies for expanding operations and building global partnerships can be difficult in the current geopolitical landscape. Bank of America Merrill Lynch is set up in Canada to support Canadian headquartered businesses in doing just that, says Schwab.
Some Canadian companies that are well-entrenched in the U.S. market may have 80 percent of their sales in U.S. Meanwhile, other companies in the beginning stages of going global may be looking to enter the U.S. market, having just five or 10 percent of their sales there. Those types of companies are often expanding their reach by exporting their products, and may look at establishing new operations or even acquiring existing companies within the U.S., says Schwab.
“They are looking to set up a banking relationship and are cognizant of the fact that as they grow, they may also need an American bank for their capabilities and expertise, and to access U.S. and global capital markets,” he said.
Navigating the U.S. business landscape
Schwab says in terms of Canada and the U.S.’s geopolitical landscape, things are comfortably fluid for the most part.
“Obviously, there's a uniqueness to both markets. I think in Canada, companies have recently had to worry more about tariffs, managing cross-border business, ways of doing business, timing, shipping and logistics with the U.S.,” he said.
“At the same time, I think companies that have established operations across the border and globally, are a bit better insulated against those challenges, as well as economic swings.”
“As a result, we’ve seen a lot of companies either expand operations to the U.S. or acquire companies abroad, just to make sure that they're less affected by tariffs, cross-border challenges or by the shifting geopolitical landscape.”
Working with a strong partner
“A well-established market industry leader will require the broad support of our global banking services, plus very detailed expertise and research around U.S. and global markets. Smaller companies are often just trying to understand the U.S. landscape and might be looking to get our insight and banking support at a regional level,” says Schwab.
Bank of America Merrill Lynch has a large footprint in the U.S., banking one in three middle-market companies there, and 94% of the Fortune 1000,” Schwab said. He continued, “That finely-tuned operational expertise, access to U.S. debt and equity markets, M&A and industry or economic reports, can help Canadian companies better strategize and plan for the future.”
The types of Canadian businesses seeking the help of American banks can vary greatly.
“In terms of size, it's really the broadest spectrum of companies with $50 million in revenues, and some companies with $10 billion in revenue.”
Schwab says, “Canadian-headquartered businesses should have a five-year plan in terms of the markets they would like to expand to, and whether they want to grow organically or by way of acquisitions.”
“Those looking at M&A should partner with a bank that can provide market updates, an overview of valuations and trends, and more specifically an overview of the types of U.S. companies that might be looking for a strategic buyer. As Canadian companies grow in the U.S., Bank of America will support them with a broad spectrum of banking services, including credit, treasury, leasing, rates and FX, investment banking, and more,” says Schwab.
“We work backwards in terms of where they want to be in five years, and then help them get there. This can range from simply diversifying geographically and growing market share, to positioning the company for an IPO, or even a sale. We bring in a broad range of expertise, to make sure our clients achieve their long-term goals.”