English
- M&A activities remain active in China, with over 80% transactions being domestic. However, we have seen renewed interest from multinational to leverage acquisitions and restructuring to reposition its business in China.
- Acquisition interests are driven by needs for local supply chain and manufacturing footprints in China, expanded product portfolio to be more competitive, and building meaningful scale.
- Divestiture are considered as strategic retreat in exiting under- performing business and reallocate capital to growth areas.
- Increasingly China technology, innovation, speed to market, and capability to commercialize has proven to be very attractive to some foreign companies as investment or strategic partnership opportunities.
- Probably the current period is the most in favor of acquirers in terms of availability of targets and valuations in recent years. While the current volatile macro environment—marked by tariffs, tense geopolitical relations, and sluggish economic growth—has prolonged M&A deal cycles and heightened uncertainty. This demands that deal participants stay agile in tracking changes, carefully balance stakeholder interests, and adapt transaction strategies in a timely manner.
- Despite a wider strategic aspiration to expand business in China via acquisitions, there is a substantial gap between interest and results. There are many headwinds in carrying out an acquisitions in China including strategic alignment with HQ; building a credible business case; generating deal pipeline; and constraints in execution capacity.
- To ensure successful post-merger integration, the acquirer must make substantial efforts—one of the most critical being to incentivize the local team by aligning their interests with the company’s long-term growth, while respecting the legacy organization’s team, expertise, and culture.
