Steady as she goes through tough challenges of overseas acquisitions

An overseas acquisition is a huge systemic project, involving complex transaction structure design, detailed investigation and negotiations, domestic and foreign government approvals, and requiring close co-operation among the acquirer, financial advisers, law firms, accounting firms, industry consultants, etc. The role of Chinese lawyers is extremely important.

Transaction design

With a view to minimising the tax burden involved in an acquisition and simplifying the approval procedures, the acquirer needs to research and design the best transaction structure with its financial advisers, lawyers, accountants and tax accountants. This requires a comprehensive analysis and consideration of the national approval procedures and timelines, tax break policies between countries, international accounting standards, etc. In our experience, in a cross-border acquisition the acquirer will generally establish a multi-level subsidiary structure overseas, with the overseas subsidiary on the lowest rung acting as the acquiring entity.

Due diligence

Data room. Due diligence in a cross-border acquisition is generally effected via a data room. The transferor will place the information pertinent for the due diligence in a data room, with the acquirer’s advisers participating in the due diligence entering the data room as authorised to access and analyse the information. Generally, there will be a time limit within which the data room is open, and information cannot be downloaded or printed without special authorisation from the transferor.

Marvin Min is a senior partner and Xue Qingjian is an associate at Zhonglun W&D Law Firm in Beijing