I can speak from risk management and cultural perspectives on doing business in or with China. 1) Make sure the interested party has the money. 2) Make sure they can legally invest in your company and consider how long approvals and payment will take. Depending on a few factors, it may take a while (e.g. more than a year) to get the investment approved, then out of China (if applicable) — if the investment is even considered legal by the Chinese government (keep in mind laws can change overnight without warning and in-process deals are typically not grandfathered in). 3) Keep that relationship strong and don’t push to sign an agreement. 4) Be aware that there are cultural differences which may make life stressful compared to working with a partner in your own country or culture. 5) Of course, there are likely more consulting and legal costs associated with a foreign transaction. All that said, many successful outbound Chinese private equity transactions happen frequently all around the world. Just consider if it is worth the extra time and energy to deal with a foreign culture and legal system.
What are the critical factors a healthcare company should consider before looking to sell to a foreign private equity group?
I represent a U.S. healthcare company that will soon go to sale. We are considering the pros and cons of the “easy money” approach of selling to an interested Chinese private equity group, versus the “one-step” option of working with a domestic partner whose reputation and work style we are familiar with.