Bargain M&A deals in COVID19 – a guide for CHINESE odi investors
Chinese outbound investment has had its ups and downs in recent years, along with the advancement of the Belt & Road Initiative and suffering a setback with COVID-19. In preparation for a post COVID-19 world, Chinese outbound investors have begun to source for bargain deals in other countries, with markets characterised by corporate restructurings, low prices, depressed valuations, distressed assets, and fire sales. This article briefly sets out some suggestions for Chinese outbound investors when entering into bargain M&A deals in this unprecedented M&A landscape. Chinese outbound investors should choose what they want to buy, re-strategize their due diligence, set the price, and pay attention to insolvency law implications and risks of politicization. In the aftermath of COVID-19, traditional playing fields will be levelled, new opportunities will arise, and valuable assets could become available at attractive prices. At the same time, Chinese buyers would need to be more flexible, be open to new acquisition approaches, and take on unfamiliar risks, all when navigating troubled markets marked by heightened political and cultural sensitivities.