Like the movies, corporate acquisitions are a collaborative art: miscast one role, and you can ruin the whole picture. The CEO may be the star of the show, but a successful deal demands a strong executive board and chief financial officer—along with investment bankers, lawyers, accountants and public relations advisors—especially when the deal in question is the purchase of a foreign company. As Chinese companies look to expand abroad through acquisitions, it’s worth reviewing the difference each member of the team can make. Here’s our take on how a company should go about choosing the cast of characters prior to an M&A.
Few direct actions of the CEO can have as much impact on the future of a company as the decision to make an acquisition. For Chinese companies that have decided to buy a foreign company, the stakes may be even higher. Unfortunately, it’s not only lonely at the top; often, there’s not much oxygen. One of the biggest risk factors in a merger is that the CEOs involved pursue the deal based on a less-than-rational reading of its merits. Overconfidence, ignorance and greed can lead to the loss of thousands of jobs and billions of dollars in value in a CEO in the grip of a merger mania.
Chinese companies are on an acquisition spree abroad. On paper, buying abroad may make sense, but from strategy to execution, a lot can go wrong. For every company that buys the right asset at the right time for the right price, handles the regulators of its industry in the right way and manages the integration with just the right touch, as many as four others flounder. Many studies have found that 50-80% of mergers fail to create any additional value, and that in fact a bad acquisition can cost the new company dearly. So how do Chinese companies fare and how can they do better?
With companies like Baidu, Alibaba and Tencent branching out into new areas, China is witnessing the rise of a new breed of digital conglomerates.
Wang Jianlin’s sprawling business conglomerate, the Dalian Wanda Group, has its fingers in many pies: from real estate and retail to sports and entertainment.
The government should step in and regulate digital monopolies because at the end of the day, healthy competition benefits all.
At times controversial, China’s Anti-Monopoly Law is playing an increasingly important role in the country
Whether it’s the progress of technology, the rapid growth of the emerging markets, or the nature of capitalism to destroy and renew industries, the challenges of maturity have tended to be overlooked in recent years. Now, however, with many economies slowing down and the world’s population getting progressively grayer, this may need to change. In this series, we look at what it takes for businesses to navigate their middle years. In part 1, we explore what it takes to lead a mature company.
Having established their dominance at home, China’s leading tech companies are increasingly turning their gaze overseas
Examining the possible reasons behind the merger of two Chinese train manufacturers, China CNR Corp. and CSR Corp.