Common Issues

The following issues are commonly encountered by Multinational companies when doing a M&A transaction in China:

• Lack of transparency in the entire market, difficult to get access to potential target's information
• Culture difference exists. If not using the appropriate language, the deal may be killed from the very beginning
• The target's financial information is not sufficient to work-out the financial model or business valuation
• The accounting principle used by the target is much different from IAS/US GAAP
• Target uses two set of books, one for management reporting, one for tax reporting
• Need to take over a huge labor force from the target
• The statutory valuation for state-owned companies may generates very different results from business valuation
• Target is overall lack of awareness of environmental, health and safety issues
• The transfer pricing between the target and its related parties is a mess
• The regulatory requirement in certain restricted industries is complex

The list goes on.