Mergers & Acquisitions
As China continues on its path of record growth, M&A activity in the country has become increasingly active. According to Thomson Financial, in 2006 there were 579 total closed M&A deals in China worth a disclosed value of US $25.8 billion. By 2010, the disclosed value (73% of the total deals made) of inbound deals alone amounted to US $21.4 billion, an increase of 102% year over year. With such large volumes of wealth at stake and companies around the world trying to take part, a business looking to expand its global reach can no longer afford to miss out on the Merger and Acquisition opportunities that await in China.
However, though China’s financial and political landscape has undergone major steps towards modernization, the complexities of the Chinese system remain numerous. While it is true that when in engaging in M&A dealings anywhere in the world, one encounters countless obstacles with which one must face, everything from due diligence and understanding local regulatory systems to asset valuation and systems integration, these can be compounded through the haze of Chinese regulatory policies and business practices.
Through our highly specialized M&A support system, we offer our clients a competitive advantage when embarking on such financial ventures within China.
The first step in any M&A deal is to identify the key players and potential participants. Our team can provide you with all the information required by your project in order to make an informed decision with how to proceed. This includes regional analysis, sector breakdowns, and potential areas for growth. Finally, you will be provided with a list of suggested target companies and profiles including key performance and financial data.
We offer a full evaluation of the other party/ies involved and use our expertise built through over 30 years of cross-border business in China to help identify any potential risks that may jeopardize a deal. This includes evaluation of management, asset status, potential licensing irregularities, and any outstanding obligations that your business is at risk of assuming.
Comprehensive due-diligence is at the heart of any solid M&A deal, and the naturally opaque nature of business in China can make this unusually difficult. At De Clercq & Company we break through the fog to provide you with all the information regarding the target company you need before engaging in the deal making process. We can help evaluate their current business model, essential vs. non-essential assets, and the integrity of financial data in order to arrive at a price that is acceptable to both parties.
When doing business in China, you expose yourself to vulnerabilities regarding both policy and cultural differences. Deals can often be closed simply based off the status of a close personal relationship, but without relying on these too much, one must still ensure structured and transparent terms for any deal with which you are engaging to avoid ambiguity. Meanwhile, the complex web of policy can get muddied down to the local level, as people often do not distinguish between what is law and what is enforced law. De Clercq & Company provides you with the insight into the cultural differences and prepares you for an inconsistent and rapidly changing regulatory environment. Experience and insight are key when engaging in China business, and we can provide you with both so as to offer a clear path towards your goal of a successful deal.
This final step includes closing on a deal and acting on its terms in a way where your business is able to maximize its benefits. We prepare you for systems integration with the foreign entity, making sure their business model exists in-line with your goals as well as to carry out all financial obligations in compliance with the current regulatory requirements. Finally, we help identify all tax benefits that can be used to your advantage while making sure to avoid all unnecessary tax burdens, particularly in relation to engaging in cross-border financial transactions.
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If you feel as if De Clercq and Company can help you with your Merger and Acquisition venture in China, please fill out the form below to submit your inquiry today!