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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.


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