Case Studies

Featured Case

Commercial Due Diligence of a Chinese Acquisition Target

Key Takeaway:
For a U.S. Manufacturing Company attempting to acquire a Chinese competitor, East West Associates (EWA) conducted a comprehensive Commercial Due Diligence of the target company and designed a Post-Purchase Integration strategy. EWA’s findings helped the client avoid a potentially disastrous investment.

Background:
U.S. Manufacturer of Industrial Products had been supplying their Chinese customer base for several years through a Chinese distribution network but concluded that they could dramatically increase their China/Asia Pacific sales by acquiring a Chinese company producing companion products.

Challenge:
EWA performed an in-depth Commercial Due Diligence on the Chinese acquisition target in order to surface those key issues that could impact the pending transaction.

Solution:
EWA and the Western client developed an acquisition team to thoroughly assess the Chinese company. EWA created and drove the Commercial Due Diligence, plus designed a Transition and Integration plan for implementation pending a successful completion of the transaction.
  • EWA deployed 5 Chinese team members to the Chinese acquisition target corporate offices and manufacturing operations and commenced with interviews, data collection and analysis
  • The Commercial Due Diligence targeted key practice areas, including: Human Resources, Supply and Procurement, Operations, Sales & Marketing, Finance and Technology. Per client request, East West conducted specific assessments of key executives working for the acquisition target
  • Completed Due Diligence data integration and summarized key findings into a detailed written report documenting our findings and recommendations
  • Reviewed Due Diligence Recommendations in person at U.S. client corporate offices
  • Established a detailed plan to drive the Post-Purchase Integration process for the client, should the transaction be completed successfully
Result:
EWA completed the Commercial Due Diligence over a 4 week time period. A number of red flags were identified by EWA, which had a major negative impact on the proposed transaction. The client modified their purchase offer terms to mitigate these negative impacts, which the seller rejected. The transaction was placed on hold indefinitely until an agreement could be reached that eliminated the liability for the U.S. buyer. Based on our Due Diligence findings and recommendations, our U.S. manufacturing client was able to avoid a potentially disastrous investment.


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