Chinese companies are getting set for a surge in M&As The mainland's mergers and acquisitions (M&A) scene is set to move into a higher gear, driven primarily by market forces, but also by government policies pushing domestic consolidation in numerous sectors and diversification into overseas markets. 'Corporations are becoming more sophisticated,' said Paul Chau, KPMG China's senior manager and head of M&A advisory for Southern China and Hong Kong. 'More of them have in-house M&A and development teams, with their own international strategy and a shopping list.' He said companies in the market for acquisitions were more than willing to listen to ideas and, with share valuations falling in certain overseas markets, realised this was the time for their 'go out' strategy to bear fruit. 'Most large SOEs [state-owned enterprises] have well-thought-out overseas strategies. They are ready to invest in fundamentally good businesses that are under stress.' David Brown, transactions partner with PricewaterhouseCoopers, noted however, that there was still a significant learning curve ahead. This applied to domestic acquisitions and private equity deals, but particularly to Chinese companies looking to buy assets overseas. 'It is new to them and they are not familiar with the process.' To address the issue of experience, he expected to see modified M&A models emerging. The most obvious was for Chinese investors to work with overseas private equity groups. This model was first seen in China National Chemical (ChemChina) and Blackstone's failed bid for Australian farm chemicals group Nufarm, and Mr Brown felt there was plenty of scope for such arrangements to generate all-round benefits. 'Bank tightening has made it harder for Chinese companies to raise finance, but one of the big issues is the shortage of private equity and M&A practitioners.'