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China PE Due Diligence Best Practice: Strategy
On February 5, 2013
This is the second article in a series of five were we present our take on how the most effective private equity firms approach due diligence in China.
1. Spend more time with the Targets
Funds that spend more time with potential targets prior to considering an investment, developing a relationship over time, tend to make better investment decisions. In this area, local firms typically outperform their foreign peers.
2. Seek out a wide range of unbiased opinions during the due diligence
Funds that limit the commercial due diligence to interviews with a few industry experts and customer contacts provided by the Target do not get a true picture of the company they invest in. Experienced investors will seek out a range of opinions, including from industry participants who can provide an unbiased view of the Target.
3. Ensure that your due diligence providers communicate
Require due diligence providers (commercial, legal, financial, etc.) to share findings and observations throughout the due diligence. Encourage daily briefings attended by DD teams to share findings and ask open questions.
Read the other posts in our series how the most effective private equity firms approach due diligence in China:
- China PE Due Diligence ‘Best Practice’: Due Diligence The Big Picture
- China PE Due Diligence ‘Best Practice’: Strategic Due Diligence
- China PE Due Diligence ‘Best Practice’: Strategic Due Diligence Execution
- China PE Due Diligence ‘Best Practice’: The Human Factor
Our ViewOur team-members' views and reflections on China-related mergers and acquisitions (M&A) – including inbound foreign investment and outbound Chinese M&A – and other China-related business issues.