Jilian Consultants Co., Ltd.
Jilian Consultants Co., Ltd.

Process and Content of Overseas Mergers & Acquisitions

Generally speaking, the entire process of overseas mergers & acquisitions can be mainly divided into planning, structuring the team, due diligence, bidding, negotiation, signing transaction documents, monitoring the transition period and satisfying the transaction prerequisites, closing, post-period price adjustment and claims, subsequent integration and operation.

Ⅰ. In the planning stage of overseas mergers & acquisitions, it is necessary to locate the target assets or target companies

For example, Chinese domestic oil and gas companies have a team dedicated to looking for project opportunities. These teams track and analyze some potential project opportunities for a long time, and wait for the right time to shoot.

From the seller's point of view, selling assets is nothing more than the following reasons:

1. Consider from the perspective of reducing risks and optimizing your own asset portfolio;

2. The asset has reached the end of production, and the disposal costs involved are high;

3. The capital expenditure is huge. For example, an independent E&P company has too many deepwater assets, and it intends to sell some deepwater development assets in order to reduce the company's capital expenditure burden;

4. The assets to be sold do not meet the expected return of the seller;

5. There is little room for reserves to increase or the cost of increasing production is high;

6. The host country has high political risk, or there is a terrorist attack, or the security cost is too high;

7. Realize exit, etc.

From the buyer's point of view, it is necessary to analyze the reasons for the seller to dispose of the asset in order to keep up with the seller's thinking and understand the issues that are most concerned about in the transaction.

In the planning stage of overseas mergers & acquisitions, the timetable also needs to be considered. Generally, the seller will have a timetable, but whether the timetable is realistic and whether the buyer and the seller can reach a consensus on the timetable is an issue that needs to be considered at this stage; at the same time, the planning stage It is also necessary to consider whether there is an agreement to buy and sell assets. Generally speaking, when the seller sells good assets, it will also sell some relatively inferior assets. The buyer needs to consider whether it can be accepted. In the planning stage, it is also necessary to consider the basic conditions for buying and selling. Whether the buyer will Whether the resale, preliminary tax planning and structuring is a public auction or a one-on-one negotiation.

Ⅱ. After the overseas merger and acquisition plan is completed, both buyers and sellers need to start to form teams

Generally speaking, the team has technical, business, legal, financial, and tax personnel. At the same time, depending on the needs of the transaction, there may also be personnel, public relations (government public relations, media public relations, investor public relations), auditors, board offices and other personnel. To join, the team also needs to hire corresponding professional external consultants, including but not limited to investment banks, accounting firms, law firms, technical service companies, human resources consultants, public relations companies, intelligence companies, etc. For the sake of confidentiality, the transaction team will set up a code name for the project. When communicating with internal members, the code name refers to the potential transaction.

Next comes the formal overseas M&A transaction process: the potential buyer and the seller sign a non-disclosure agreement first, the seller opens the data room, the buyer conducts due diligence, and then makes an offer based on the results of the first round of due diligence, and the seller selects some potential buyers to enter the first round of due diligence. Second round, after the second round of due diligence, the seller selects several potential buyers to enter into the global negotiation in mergers and acquisitions process.

Then, after the buyer and seller reach an agreement on the price, text, etc., the transaction agreement is signed; if one of the buyer and the seller is a listed company, after signing the transaction agreement, it is often necessary to announce the transaction in accordance with the disclosure rules of the relevant exchange; sign the transaction agreement After the completion of the project delivery, the buyer pays the price and obtains the assets or the company after waiting for government approval, third-party consent or waiver of pre-emptive rights and other preconditions.

After the delivery, the price adjustment will generally be made in accordance with the price adjustment method specified in the transaction documents. If there is a claim event that the seller should be responsible for as stipulated in the transaction document within a certain period, the seller should also pay the buyer the corresponding compensation; finally, The buyer continues to operate and integrate the acquired asset or company, and the M&A Negotiation overseas process ends.