Operational & Manufacturing Due Diligence of Chinese Acquisition Target
Key Takeaway:
Western client needed to develop greater Operational and Manufacturing Capabilities in China in order to meet growing product demand.
Background:
U.S. Manufacturer of environmental products had been supplying their Chinese customer base for approximately 7 years by exporting their products to China. They were at a crossroads and needed to increase capacity while reigning in costs.
East West Associates (EWA) reviewed 3 scenarios outlined by the Company:
Establish their own manufacturing and distribution plant in China
Subcontract production to a Chinese vendor
Acquire a Chinese company with strong sales & marketing and manufacturing capabilities
Based on EWA’s Competitive Intelligence Investigation, the Western Manufacturer decided to pursue an Acquisition Strategy in China.
Challenge:
Perform an in-depth Operational and Manufacturing Due Diligence on the Chinese acquisition target in a 5-week time frame.
Solution:
EWA’s Due Diligence included:
Management and organization of the Chinese Acquisition Target
Profile of key executive managers at their 2 manufacturing plant and major sales offices
Workforce Profile, Senior Management Departures
Description of Business Operation and Conditions
Competitor Information
R&D Capabilities
Corporate Strategic Plans
Marketing Capabilities
Sales and Distribution
China governmental relationships
Business Relationships (with customers, vendors, employees)
Manufacturing weaknesses of the Chinese Acquisition Target
Organizational structure
Challenges of integration into the U.S. Company
Recommended Acquisition Strategy for Chinese firm
Negotiated acquisition
Drove the Integration Process
Result:
EWA completed the Operational Due Diligence on time and managed the integration in China for the Western Company.
U.S. Manufacturer of filtration and separation equipment for the Chinese energy and natural gas sector was looking to expand their commercial footprint in China.
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.
