Seven steps that can spell cross-border M&A success for Chinese companies

Enterprises can navigate the difficult M&A terrain if they pay heed to some important factors, say experts

PUBLISHED : Friday, 28 October, 2016, 9:03pm
UPDATED : Friday, 28 October, 2016, 10:18pm

Respect different viewpoints: Showing you are listening to the other organisation and taking into account their considerations will help motivate them to do their day-to-day business, says Carl-Johan Skold, director of Shanghai-based Stenvall Skold and Company.

Retain top talent from both companies: Talent retention is important, but it is also important to ensure that they are aware of the benefit of the acquisition. Bain’s Phillip Leung says it is also important to figure out a plan B. “What if the person takes the money and goes. The management team may get rich because of the deal and they probably don’t want to work anymore, or don’t need to work anymore.”

Culture clash: Why Western companies are better at mergers than their Chinese and Japanese counterparts

Do proper due diligence: Invest in due diligence and plan the integration before the merger actually takes place.

Have a clear idea of the M&A strategy, benefits: It’s not enough to just have the right attitude and move fast, says Skold. “The companies that have done well have a clear strategy in place. Before they make an acquisition, they have a clear idea of what they want to achieve and how it lends synergy to the company.”

Have a dedicated M&A team: European and US companies have a dedicated team for mergers and acquisition-related work. However, Chinese companies often have to reassign people to a merger on top of their regular work.

Try not to be over-controlling: Bain’s Leung recommends focussing on what really matters, rather than trying to control and integrate every aspect of the M&A deal.

Proper integration of IT systems: It sounds mundane, but prioritising system and IT integration can have a positive impact on other parts of the integration, allowing communication to flow more easily, says Baker & McKenzie.

Sources: Baker & McKenzie’s ‘The Global Challenge’, Carl-Johan Skold from Stenvall Skold and Company and Philip Leung from Bain Asia-Pacific