China has Become the Global Second Largest Economic Entity

With over 1.4B population and over 400M emerging middle class, China has become one of the biggest global markets in many industries. For some sectors, e.g. new energy vehicle, China has become the No. 1 market in the world.

However, due to various challenges, from language and cultural differences to lack of internal resources, many foreign companies failed to either attract Chinese investors or grow quickly into Chinese market. Companies with the following characteristics have better chance to win:

1. In a growing industry for China, and possess technology breakthrough

2. With product offering, better with wide sales channels overseas

3. With right team or professional advisor, who can use a holistic approach to establish a practical strategy and roadmap

4. With strong execution capacity

Chinese Investors Have Special Characteristics

Chinese investors are seeking growth partners and possess obvious characteristics with pros and cons in general:

Pros: 

1. Strong motivation both in short term and long term
2. Synergy potentials with the target company, especially in the Chinese market
3. Friendly investors that mainly relying on the local management teams to keep running the target company with an incentive plan in place

Cons: 

1. Overall inexperienced in M&A transactions; need professional help and hand-holding
2. Sometimes slower decision making process, especially for some state-owned enterprises

Tips to complete M&A / JV in China

Recent economic slowdown creates unique M&A / JV opportunities with local market leaders for MNCs in China. Below are some suggestions to get deal closed successfully:

1. Create a win-win strategy by understanding the motivations of both sides

2. Focus on key risks during DD process to avoid being overwhelmed due to cultural difference

3. Ensure a successful integration execution

4. Most Chinese companies are inexperienced in M&A transactions; need professional help and hand-holding

Arbor Lake Capital is Your Go-To Source to Access Chinese Investors and Market

As one of the most experienced cross-border M&A team in China, we understand the challenges in cross-cultural transactions, and are inspired and highly motivated to find solutions to close any gap in order to bring a deal together. Our partners are the first generation of M&A professionals in China, while all of our investment banking team members are bilingual / bicultural professionals. Our professionalism and years of M&A experience set the base for our strong execution capability.

As a boutique investment bank, entrepreneurship is our gene. All of our projects will be led by our partners at project execution level, and any projects we are engaged in will be our highest priority with no compromise on work quality.

Both our Chinese and international teams are one team working as one profit center. There are no internal conflicts of interest or communication barriers.