Fresche Solutions: Integrating new markets requires patience

Fresche Solutions is internationally renowned for modernizing computer platforms and applications built and marketed by IBM. Acquiring these platforms is such a big investment that it’s more profitable for users to maintain and modernize existing platforms than having to acquire new ones.
That’s where Fresche Solutions comes in. They adapt computer tools companies and organizations have been using for decades to present-day standards by improving the graphics, adding features and making the platforms compatible with cellphones and tablets, among other things.

Geared toward international markets

After acquiring competitors with an established customer base and solutions that complement its offerings, Fresche Solutions is thriving and currently expanding, mostly in North America. Over the past few years, the company has also made acquisitions in the UK and Australia.
Exporting its products and services has always been at the heart of Fresche Solutions’ strategy, with 98% of its sales coming from exports and the US representing nearly 40% of its market. Patrick Thibault, Chief Financial Officer at Fresche Solutions, says: “Exporting has allowed us to grow into a company with over 370 employees and clients around the world. We would have 12 to 15 employees if we had simply stuck to the domestic market.”
EDC’s support during the company’s international growth was very helpful. “EDC contributed by providing guarantees for export receivables as well as the guarantees required for our acquisitions in the UK and Australia,” adds Mr. Thibault. “The people at EDC were very creative and responsive, which was vital to our acquisition strategy.”

Potential changes in North America

Regarding the challenges currently facing the company, Mr. Thibault mentions the renegotiation of NAFTA and increasing protectionism in the US. “We’re obviously concerned. We already have production facilities and office employees in the US — we have a presence there —, but we’re still a Canadian company with a mostly Canadian ownership.
“While we don’t know exactly what will come out of the renegotiation, we might have to transfer funds out of the US and into Canada, in which case the US government could decide to levy taxes. In order to use our funds there, we would be forced to set up larger infrastructures in the US, which would hinder job creation in Canada,” explains Mr. Thibault. “We’re following the issue closely, because the US market is just too big to be ignored.”

What you should keep in mind when thinking about exporting

Even in an industry such as the IT sector where speed of execution is capital, taking time to do things properly helps successfully integrate new markets. Mr. Thibault explains: “People generally underestimate the time required to get a good understanding of the local market and adapt to both the culture and their business partner. Sales cycles and the steps leading to a deal vary from one country to the next. Sometimes you take the wrong direction or do something that doesn’t bring any benefit, which results in time loss.
“There are also big differences in terms of regulations and taxation. In the US for example, each state—and in extreme cases, even each county!—works differently. That’s why every time you look at a new market, you have to make sure you really understand the regulatory framework, distribution network, purchase processes, etc.”

Tip from an expert

Mr. Thibault concludes with the following advice: “Going international is a bit like going to the casino: you have to be willing to lose some money. Exporting is a great growth opportunity, but it comes with initial costs that you’ve got to be able to absorb. If you can afford to lose, you’re patient enough to do a good job. Looking to repatriate funds too quickly means you often have to take shortcuts, and your integration into the new market ends up being more challenging and taking longer.”