A Checklist For International (China Too) Acquisitions

Every lawyer loves a great checklist, particularly those relating to company acquisitions, where checklists are so critical. Adam O. Emmerich, a leading M & A lawyer with super-firm Wachtell Lipton Rosen & Katz, recently wrote a Checklist for Successful Acquisitions in the U.S. for The Harvard Law School Forum on Corporate Governance and Financial Regulation (h/t to International Business Law Advisor).

The checklist is meant for foreign companies acquiring U.S. companies, but virtually all of it applies with equal force to foreign companies acquiring Chinese companies.  I particularly liked the last two items on the list, as those two apply with great force to China deals:

• Due Diligence. Wholesale application of the acquiror’s domestic due diligence standards to the target’s jurisdiction can cause delay, waste time and resources or result in missing a problem. Due diligence methods must take account of the target jurisdiction’s legal regime and, particularly important in a competitive auction situation, local norms. Many due diligence requests are best channeled through legal or financial intermediaries as opposed to being made directly to the target company. Making due diligence requests that appear to the target as particularly unusual or unreasonable (not uncommon in cross-border deals) can easily cause a bidder to lose credibility. Similarly, missing a significant local issue for lack of local knowledge can be highly problematic and costly.

• Collaboration. Most obstacles to a deal are best addressed in partnership with local players whose interests are aligned with those of the acquiror. If possible, relationships with the target company’s management and other local forces should be established well in advance so that political and other concerns can be addressed together, and so that all politicians, regulators and other stakeholders can be approached by the whole group in a consistent, collaborative and cooperative fashion.

I recommend you check it out.

We will be discussing the practical aspects of Chinese law and how it impacts business there. We will be telling you what works and what does not and what you as a businessperson can do to use the law to your advantage. Our aim is to assist businesses already in China or planning to go into China, not to break new ground in legal theory or policy.