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Global: Freshfields study puts China’s M&A risks into perspective

By  |  December 9, 2013

As analysts study China’s recent vow to increase antitrust scrutiny, reports are emerging with evidence of whether foreign firms face extra hurdles in the nation. A study conducted by law firm Freshfields Bruckhaus Deringer found significant risks of doing business within China, reporting 25 percent of merger and acquisition deals facing problems of various kinds, including issues with China’s National Development and Reform Commission.

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    The results, however, seemed mild compared with other nations, according to the Freshfields study. Indonesia, for example shows 60 percent of M&A deals facing problems, and 83 percent of deals faced issues in India.

    Further, Freshfields found that 28 percent of cross-boarder merger deals within developing nations face setbacks that include regulatory probes and government lawsuits.

    ”While deals which encounter problems in China are often well publicized, there’s a great many transactions that are being competed smoothly and are less well-known,” said Freshfields partner Edward Freeman.

    A similar study released by Policy and Regulatory Report has evaluated the risks of foreign companies doing business in mainland China since the nation’s NDRC announced an investigation into US-based Qualcomm. The mergers and acquisition publisher reportedly found substantial risks for foreign companies as the NDRC and other authorities have increased scrutiny of non-domestic firms.

    Full Content: South China Morning Post

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