Moreover the representative Danaher talked in his speech about the necessity of full comprehension of strategic rationales. These topic relatese to questions on the attractiveness of the market segment, the sustainability of margins, significant integration risks and, not least, use of the proper technology.
Since the year 2000 China has experienced a rapid growth in both domestic and overseas M&A deals. From 2010 to 2013, China’s sales volume has increased from 100 Mio. USD to about 2.3 Bio. USD. Nevertheless, doing deals in China requires particular attention to several areas according to Danaher.
Danaher considers four challenges important:
The first challenge of doing deals in China lies in the IPO fever and high valuations. China is recently undergoing a situation of IPO fever and high valuations, especially with the recent stock market appreciation. In addition, private equjty companies are activeand strategic buyers tend to look for opportunities to buy controlling stakes. In addition, many entrepreneurs are entering into retirement age and may be willing to sell their enterprises if no successor is in sight.
The second challenge of doing deals in China lies in the underestimation of the complexities and impact of regulatory approvalprocedures . Danaher emphasized the complex character of the approval process in advance of deal transactions and added that the regulatory requirements have a large impact on the deal structure. Therefore, managing overall government relationships is a key success factor in transactions.
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