Managing the auction process

In China, almost all acquisitions of state-owned enterprises (SOEs) are complicated by the fact that the deal is statutorily required to go through a public listing and auction process designed to safeguard the disposal of state assets, regardless of whether it is structured as an equity or asset transaction. The related rules also apply to the sale of non-SOE entities (including Sino-foreign joint ventures) if state assets are involved. Foreign deal makers need to understand the process to effectively manage a transaction so that the intended commercial objectives will not be frustrated.