China Due Diligence
In-depth due diligence can be undertaken in various ways and to varying degrees of detail. It is typical in cooperate, financial, legal, labor, tax, intellectual property, assets, insurance, debt, environmental, real estate/property, commercial and international transactional matters. It is a prerequisite for the target of an acquisition, merger, any significant investment, potential business partners or joint venture relationships as well as all significant contractual counterparties.
The US Foreign Corrupt Practices Act (the "FCPA'') and the UK Bribery Act have forced many companies (not just American companies) to reconsider how they evaluate overseas relationships with agents, contractors, suppliers, vendors and business partners in particular with regard to foreign officials. FCPA due diligence is essential in terms of evaluating the risk of doing business with an entity prior to establishing a relationship, as well as evaluating existing overseas relationships.
No foreign investor or acquirer should underestimate the value and need of thorough due diligence on the targets of an acquisition, merger, any significant investment, potential business partners or joint venture relationships as well as all significant contractual counterparties in China.
Comprehensive due diligence ensures an investor or acquirer has fully apprised itself of all the key information necessary to pursue a particular transaction or relationship. For similar reasons, it may be advisable for the target of an investor or acquirer to consider due diligence on that investor or acquirer (to try to ascertain if monies to be received derive from illicit activities) if there is any doubt as to the source of funds or to otherwise determine if a transaction should move forward.
In performing due diligence, we will carefully discuss the details of the matters to be investigated in order to define and agree the scope of the investigation. On this basis, a checklist will be constructed which will be the reference for conducting the due diligence investigation. Upon acquiring all the key data, we will then prepare a report in which all such relevant data is presented, the results of which will typically form the basis of whether an investment, acquisition, merger or some other relationship should either be initiated, transacted and/or consummated.
We provide due diligence investigations on a broad range of matters, including competitors, customers, business partners, services, political background analysis, management reputation, track record, asset verification, business profiles, corporate activities, resources, products, labor, debt, legal, tax, and financial issues.
Case Examples:
-Assisted an MNC pharmaceutical company perform effective due diligence on a potential local distributor of its products in China. A. Louie conducted a supply chain analysis and a background check on that potential distributor. A. Louie also provided a risk management plan for the MNC.
-An American company wanted to hire a local Chinese citizen as its China CEO. A. Louie performed an in-depth DD on that individual which included discreet investigation and research into his family and political background, academic records, civil and criminal litigation and even his health. Our team liaised with relevant industry associations, past professors and employers, judicial authorities, Hukou registration, and credit agencies.