Selling to China

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Ian Mombru shares six takeaways on selling your business to a Chinese buyer. 

Earlier this week, ChemChina’s US$44bn acquisition of Syngenta, the largest ever by a Chinese buyer, took a major step towards completion, securing clearance from the Committee on Foreign Investment in the U.S. (CFIUS).  The transaction helped propel the first half of 2016 to an all time record of US$121bn of cross-border deals by Chinese companies, more than the full year total for all prior years.

This trend shows no signs of abating. In pursuit of diversification from a slowing domestic economy and a weakening currency, and supported by favourable domestic financing and regulatory environments, Chinese investors are scouring the globe for potential targets, across an ever wider range of industries.

For M&A practitioners, courting prospective Chinese buyers is an increasingly critical pillar of a successful sales process, yet for many, the experience is an unfamiliar one.

I’ve highlighted six key takeaways from advising on both the buy and the sell side of Chinese cross-border transactions. While these observations are mainly drawn from private M&A deals, the lessons also apply to public offers – subject of course to compliance with any applicable takeover regulations in the target’s jurisdiction.

 

Key points include:

  • Casting a wide net
  • Familiarise yourself with PRC Outbound regulations
  • Subtly managing competitive tension

 

Read the full article, Selling Your Business to a Chinese Buyer, on LinkedIn.