Private investors must closely watch targets

To mitigate post-acquisition risks, private companies need to consistently stay attentive to the target company, be cautious when selecting assets, and keep a close eye on the market, say counsel.

The State Council issued an Opinion on September 6 that lifts regulatory restrictions on trans-regional M&A activities in certain industries. In addition to offering preferential policies to encourage participation from private investors, the new regulations allow local governments to negotiate agreements on allocating revenue.

Although private companies may face difficulties when buying into state-owned enterprises (SOEs), Orrick Herrington & Sutcliffe's China corporate partner Neal Stender says that there are ways to reduce “negative surprises” in such acquisitions.