With the global economy recovering, foreign strategic buyers are re-emerging the surface of the Chinese M&A market and are actively looking for expansionary acquisitions. Entering the Chinese M&A environment is however challenging due to:
- Industry structure and geographic scale
- Constant changing regulatory environment
- People versus systems
- Partners and alliances
- Compliance costs
- Potential traps on financial & tax information
- Proper structuring
- Intellectual property environment
Although the global economic recovery will entice foreign strategic buyers to look for Chinese investment opportunities, all parties involved are notably more selective in their investments and will look beyond the valuations in order to identify fundamentally sound companies. Absent local presence sourcing good quality deals in a highly fragmented and widespread market requires a combination of in-depth local knowledge and an integrated local network. Moreover the ability to implement operational efficiencies can be dictated by the quality of the relationship with management and is often constrained by minority interests.
PricewaterhouseCoopers China – in close cooperation with the business development team and the Transactions practice of PricewaterhouseCoopers Belgium – can assist in this process of sourcing the attractive investment opportunities and to perform due diligence procedures to determine the optimal governance and operational structure post closing.