Authored by Jacob Ambrose Willson, Senior Editor, Criticaleye

Once a business has reached maturity in its home market, attention naturally turns to international expansion as the next growth frontier.
 

Nick Burns has first-hand experience of this during his time as CEO of UK-based employee engagement platform Reward Gateway | Edenred, which now hosts around 6,000 clients, who together, employ and provide platform access to over 10 million employees.
 

And since the company was acquired by the global employee benefits and payment services group Edenred, for over £1 billion in 2023, it has expanded into new jurisdictions across Europe and wider emerging markets.
 

Here, Nick explains the opportunities and pitfalls that need to be navigated when a business looks to become a global player.
 

 

Q: What were the strategic reasons for Reward Gateway | Edenred’s recent expansion into new markets and how did you approach it initially?
 

A: The adoption of an employee experience platform by an employer for their employees is quite a mature market in the UK, the US and in Australia, which were Reward Gateway’s core markets prior to the acquisition by Edenred. It is less mature in other European and South American countries.
 

However, one of the European locations that had already started to mature in employee engagement was Belgium. We thought it was going to be a fairly straightforward transition into Belgium. The truth is we were naive in believing that we could just pick up our ‘Anglo-Saxon’ platform and drop it into Belgium, without any real deep understanding of the culture there.
 

Q: What were the steps you had to take to embed your services in this new jurisdiction?
 

A: It became clear very quickly that this was more than just launching a platform into a new country. This was about migrating thousands of clients, with over a million employees off an old platform onto the new Reward Gateway platform. And we weren't really prepared for this.
 

Yet our team did the most amazing job. They worked really hard with their Belgian counterparts. We expected it to take six months. The reality was it took 18 months to complete the migration and close the old platform. It was worth the wait, for everyone, as the Belgium employee usage on the Reward Gateway platform has increased by over 40 percent. Usage is a key success indicator.

 

 

To hear more from Nick on international expansion, listen to the full podcast here
 

Q: What role do private equity investors play within an international expansion strategy?
 

A: One thing that many PE houses are starting to realise is that growing organically into other countries is not easy. It takes time, and often the time that it takes to be able to demonstrate growth in those countries may not be within the timescale of the fund. So, it's probably easier for them to deploy their funds more rapidly through a buy and build strategy, buying in another geography and then building out from there. My view is that this is going to increasingly be the way in which PE funds will want to deploy their capital for international expansion.

Q: What is required of leaders to prove to investors that a business is ready to add international scale through acquisition?

 

A: If you are not able to grow organically, I seriously question the viability of the business. I really believe that leadership teams must be able to demonstrate to their shareholders that they are capable of growing organically.
 

Once they have demonstrated that, then they earn the right to be able to engage in M&A activity. Once earned, confidence increases to ask investors to deploy additional growth capital. And that capital can be unleashed for growth in other geographies.
 

Q: How do you ensure the business continues to perform while attempting to grow into new markets?
 

A: Your existing business can't fall over during that process. That means you've got to have super talented and trusted people around you, who can continue to run the business for you, so you're not worrying about that as well as worrying about the acquisition and global expansion.
 

Having great people around you, who you can trust, gives you the best chance of success. Then additional shareholder capital will inevitably flow to explore further M&A opportunities.