Strategic Due Diligence
“China is different”, foreign companies keep on hearing. If this statement is obvious, it shouldn’t lead foreign companies to set aside a rigorous approach concerning acquisitions or JVs. Actually it is quite the opposite as too many Western investors are ill-advised to “adapt to China” and to forget decades of proven-methodologies and valuation techniques.
In China, numerous factors such as opacity, different law and tax compliance standards, “misunderstandings” and approximations often result in vast differences between a target preliminary analysis and the actual company you may inherit several months later.
Hence, a solid strategic due diligence will largely contribute to identify common pitfalls and circumvent major risks. Generically, these strategic due diligences will cover:
- Critical review of target’s available data
- Analysis of business plans and performance monitoring tools
- Assessment of market segments and growth trends
- Review of assets and skills
- Review of key competitors and their respective positioning and strategy
- Stress test of the corporate strategy and provide ad hoc recommendations
The Chinese market offers opportunities for profitable external growth to the companies that are ready for this leap forward. We provide advice on critical aspects of deals and coordinate the other services required.
Alternatively, European companies may benefit from Chinese capital injection and allow reciprocal development of both European and Chinese markets through complementary offers.
Our services encompass:
- Target or buyer identification
- Deal structuring, notably with the objectives to enact earn out possibilities and avoid unfair competition from the seller
- Target evaluation according to international standards
- Negotiations in a specific Chinese context
- Drafting of the main agreements at each step of the operation
- Embed China-specific anti-deadlock solutions to ensure a sustainable collaboration
- Coordination with additional services necessary such as lawyers or accountants
- Liaison with ad hoc authorities and approval bodies