Why Covalent?

Why Covalent?

Determining whether an international business opportunity and business partners from a diffident jurisdiction and culture are the right fit, is an expensive and time-consuming process and is a challenge for SME independent owners and operators. Expensive investment banks and private equity houses do have due diligence, mainly on the investment opportunity, however it comes with expensive business models.

Prior understanding of the people, the potential for teamwork and the necessary multijurisdictional challenges are necessary prior to exploring and ultimately entering into and operating International Joint Venture Businesses.

Covalent saves its clients time and costs by carrying out sufficient due diligence on the teams who would be working together in the International Joint Venture and also the underlying opportunities.

Independent business owners and operators can therefore meet and determine beforehand, before investing the time and resources in completing financial and technical due diligence, whether the international Joint Venture opportunity is right for them.

Why International Joint Venture Services?

Small and medium size US and Canadian owners and operators face similar situations to small and medium size owners and *operators on Latin America. Access to financing for projects under USD100M is difficult to secure. Operational and production costs in US and Canada are high due to regulatory and market conditions. Latin America has lower costs of production but faces political instability and high inflation and other economic risks that make cross border finance difficult for SMEs. Cross border private equity business models are also expensive for SMEs based on deal size and critical mass of capital.

SME owners and operators in North America have access to resources and expertise that owners and operators in Latin America need and find difficult to access due to local market conditions. Many international joint venture opportunities do not occur because SMEs do not have time, cashflow and resources to invest in speculative due diligence to locate viable business partners and opportunities. Investment banks and boutique private equity houses so have deal lists however these come with expensive business models.

Covalent enabled international Joint Ventures are a more cost-effective approach than cross border private equity. Covalent has invested in the right initial due diligence to allow owners and operators to invest the time and effort to meet and determine if an international joint venture is viable. Covalent brings together the multi-jurisdictional services that enable parties to successfully implement and operate a cross border Joint Venture business.

Why Barbados?

Beginning in 2018 the rules of international business and finance changed. With the implementation in 2018 of Global Automatic information exchange, due to OECD MLI, BEPS and the CRS and FATCA, and increased EU directives like the 5th ML Directive, for the first time in 40 years tax authorities globally will have unprecedented amounts of information about persons doing business and investment internationally.
  • The Global minimum taxis coming in 2020 and the new Global digital taxation will also increase taxation of profits earned by ecommerce, service providers and digital corporations of all sizes.
  • This new Global Transparency or information sharing, will lead to unprecedented and increased taxation and increased cost of doing international business and wealth management.
  • In other words, taxation is going to increase internationally by 15-30%. In order to avoid increased costs and unnecessary reduction of your wealth, you will have to put in place new cost-efficient arrangements and make sure those arrangements are compliant at all times. One of the countries from which this type of international business or wealth management can be done cost effectively is Barbados.
  • Barbados is the only low tax jurisdiction in the Caribbean with double tax treaties and a viable international financial centre.
  • The US Barbados DTA offers certainty and legal protection in relation to doing business in and through the US.
  • Politically stable and secure- The history of Barbados is one of the rule of law, parliament and due to its geography, a safety and security. Visitors can relax when they come to Barbados to deal with their international business or wealth management arrangements.

Why now?

With high costs and in North America and low costs but challenging above ground risks in Latin America, and increasingly challenging and changing business environment, the right international joint ventures can provide SME owners and operators with a robust business and wealth management platform. By adding a n international Joint Venture to owners in North America can generate cash and bring into use idle expertise and assets and Latin American owners can access the resources to operate profitable opportunities.