Chinese companies are on a buying spree: over the past five years, outbound M&A volume has risen by 33% per year. In 2016, Chinese companies spent $227 billion, six times what foreign companies spent acquiring Chinese firms. And Chinese companies were involved in ten of the largest deals worldwide in 2016.
What role will Chinese companies likely play in global M&A transactions in the coming years? What lessons have Chinese companies learned from their deals to-date, and what should they do differently going forward? What should companies outside of China do to ensure that the deals they strike with Chinese companies deliver the returns they are seeking?
These are just a few of the questions we address in this collection of essays by my colleagues in McKinsey’s Strategy & Corporate Finance Practice. In “Making sense of Chinese outbound M&A”, we tackle some of the myths circulating around this wave of Chinese outbound acquisitions – that all of the money flowing out of China is just a wave of capital flight, that the invisible hand of the government lies behind it, or that post-deal integration isn’t important to the buyers.
In “Chinese outbound M&A: the decade in review”, we take a look at the extraordinary progress Chinese companies have made over the past decade on outbound acquisitions, and assess their successes and failures.
One of the myths surrounding Chinese outbound M&A is that a lot of the deals being done are driven by the state, and by state-controlled sources of cheap funding. But in “Funding China’s outbound acquisitions”, we show why this is not the case. We then analyze the different sources of funding, and how these are evolving over time.
The most challenging part of most deals is what happens after closing.
Research shows that getting integration right is a crucial factor in the ultimate success of any deal. In “From active buyers to active owners”, we look at several possible models of integration, and discuss a few examples of what worked well.
Regulatory approval is a pervasive concern for Chinese companies acquiring targets abroad. While some deals have been blocked due to regulatory concerns, many more have been cleared but with remedies imposed. In “Paperwork and politics: navigating cross-border M&A regulation”, we pick apart the issues Chinese companies face as they confront complicated regulatory environments abroad.
Fuente: McKinsey Company - Greater China.