Acquisitions Of Listed Family Firm In China

By the combination of theoretical analysis and a case study on the deal of ChinaMengniu acquiring Yashili, this study serves to help understand how Merger andacquisitions(M&As) processes involving family firms differ from more traditionaltransactions and to identify the key considerations and solutions for acquirers in thecontext of acquisitions involving family firms. The analysis of the case would be donein mainly three aspects: favourable conditions for the acquirers, pricingconsiderations, potential risks and deal detail designs.The research has the following main results. Firstly, the potential of family firmM&As in China is underlined. Secondly, when choosing potential candidates,acquirers prefer family firms which have no practical succession plan, showingprofessionalism in the management, expressing strong willingness of founders to sellthe company, and having small possibility to other alternatives. Thirdly, both positiveand negative impacts of the family specific characteristics are taken into valuationprocess. Finally, acquirers could establish incentive plans to retain employees andmitigate risks of this deal type. As for the issue of whether or not to keep the targetcompany listed, there are certain aspects of considerations for the acquirers.This case study contributes to the body of research concerning acquisitions oflisted family firm in China, providing implications and references for acquirers infuture M&Adeals involving Chinese family firms. Moreover, it may be significant forthe educational community since current cases seldom discuss acquisitions of familyfirm, especially in Chinese environment.