Catalog

1Introduction and overview....................................................................................... 1

    

2The protection of private information confidentiality agreement.....................................................................1

    

3The preliminary analysis..................... ......... ............................................................ .. 1

    

4To complete the American acquisitions in USA company............... ................................. 2

    

5Set the terms of the deal, letter of intent, the memorandum of understanding or the list of clauses........................... .......... 3

    

6Method of trading, asset acquisition, stock acquisition and merger................................................ 5

    

7Legal due diligence.................................................................................... .. 6

    

8The final purchase agreement.......................................... ........................................ ... 7

    

9Government approval or notification.................................... ............................................. 8

    

10The transaction settlement................................................................................. 11

    

11Conclusion............................................................................................. 11

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal guide America enterprise acquisition

1 Introduction and overview

China companies have a lot of business opportunities in USA, including many opportunities to acquire America enterprises. However, the acquisition of a America enterprises may be a complex process, if not to the right way of trading, Chinese acquirers may face significant legal and financial risk. So for Chinese the acquirer at the beginning of the formation of a experienced purchasing team to guide the entire acquisition process is crucial. The acquisition team includes American commercial lawyers, certified public accountants, Bank experts and property valuers. This guide is designed to provide a basic introduction to go through the process and steps about buying a America enterprise for China acquirer.

2 protection of private information confidentiality agreement

The acquirer can finally decided to target USA enterprises (hereinafter referred to as "Target Corp") before or even a takeover offer, the acquirer and the acquired team needs to get the basic information about the Target Corp (including the basic financial information). Target Corp may be reluctant to buy with any information, unless the buyer first signed a confidentiality agreement. Confidentiality agreement is typically two to three pages, in the confidentiality agreement, buyer agrees to Target Corp to provide all the information confidential, not disclosed to third parties, also do not use any such information (and acquisition related except).

Specific information confidentiality agreement covers are determined by the buyer and Target Corp consult. Definition of confidential information contained in Target Corp hopes to secure protocol in better and more widely to include verbal disclosure. The buyer wants to define the confidential information of the narrow and confined to a security tag information. In almost all cases, the definition of confidential information is contained in the agreement are included in all of the information in accordance with the applicable "trade secret law" and other laws of the Disclosing Party's secrets, including product specifications, proprietary technology, formulation, design, customer name and customer list, and supplier list, supplier name financial information and records and product prices and cost information. A confidentiality agreement and perfect various exceptions provide confidentiality agreement defined or exceptions, such as any information in the past or now widely available to the public, the acquirer does not refer to any confidential information Target Corp information disclosure and independent development of the past or present the acquirer can never by any information confidentiality agreement constraints third get in the non confidential basis.

Although the confidentiality agreement is usually related to business people as iron agreement or the format of the agreement, but that is not the case. The acquirer should be particularly careful in signing a confidentiality agreement, because such agreement may and usually contains other restrictive covenant, customers or suppliers such as can't hire employees of the Target Corp and could not be contacted or employed by Target Corp. Sometimes, the Target Corp also hopes to conduct due diligence on the acquirer, to assess the ability to complete the transaction of the acquirer; or if the seller financing, it is to the credit assessment acquirer; or if the Target Corp or its shareholders will get reward includes the purchase stock, is to analyze the value of the stock.

3 preliminary analysis

    Once the buyer signed a confidentiality agreement, Target Corp usually provides its own basic history and general situation of the information to the acquirer for Target Corp, including customer and supplier database information, product overview and often consists of three to five years of financial reports and tax declaration, the basic financial information.

Once the acquirer obtain such basic information, the acquisition will determine whether still on the acquisition of Target Corp interested in professional assistance, if you are still interested, will carry on the estimate analysis, in order to support may give the purchase price. The purchase price is the ultimate embodiment of the value of the enterprise. If the Target Corp is a privately owned company, and must be adjusted for some projects reflect the financial statements or re establishment in order to understand the real profitability of Target Corp is not uncommon. These adjustments are often used for all people, or their families, abnormal high wages to building stakeholders all pay higher than the market price of the rent and the unusual or expected spending will not happen again.

Evaluation of the Target Corp, from the beginning of the need to identify a very basic problem, that is, "to buy is what? Target Corp shares or assets of the Target Corp?" The Target Corp owners generally tend to sell shares of stock trading, because only a USA capital gains tax to Target Corp, and stock trading is usually considered to be relatively simple, easy to implement. On the other hand, if the assets on the balance sheet of the existence of a large number of depreciable assets, the acquisition of shares may not be conducive to the acquisition side, because the acquisition will not for tax purposes to improve such assets American tax base, thereby increasing for tax purposes in the future depreciation, unless the Target Corp and acquirer agreed to and make some tax select. In addition, the stock transaction, the acquirer can't choose the acquired enterprise will be accompanied by what debt, so finally bought the Target Corp, including all known and unknown debt. Based on these reasons, the acquirer usually want to buy is the enterprise assets, rather than shares, and shares in the transaction acquirer valuation of enterprises often have low. Compared with the sale of shares, trading in the sale of assets, the acquirer may according to the different taxation way finally gives a higher valuation.

The enterprise valuation method has many kinds, price earning ratio method is probably the most commonly used method, most of the acquired enterprise is such that the acquirer valuation, according to the method of determining the purchase price to earnings multiples. Other evaluation methods have "discounted cash flow method", "book value method", "adjusted book value method", "liquidation value method" and " comparable transactions" market method.

    Once the acquirer and its valuation consultant conducted a preliminary analysis of the review and appraisal and that the Target Corp and the expected

As to the acquirer is satisfied, then to talk about the takeover. Inevitably, this will mean and beauty

Party a business owner or the man in the middle (lawyers, agents, brokers and accountants) you can pay the enterprise value or price

Dialogue. Must pay attention to, in the negotiations stage, the price is still subject to the contract, this point is very important, because from now

During the preparation and execution of the final purchase agreement, the acquirer may find other or change the acquisition of Target Corp

Related information about Target Corp, knowledge value, therefore the acquirer may want to price for further consultations.

4 to complete the America acquisitions in America company

To take further action, in China enterprises to the acquisition agreement signed and eventually acquired American enterprise final before, Chinese enterprises need to set up an in American provide platform of the Usa Inc. The new Usa Inc will directly or indirectly (through a new holding company) for China parent company and eventually become the Target Corp acquisition. The first decision Chinese enterprises must do is business entity form or type and enterprise entity jurisdiction where the.

On the establishment of an Usa Inc as an acquisition vehicle, there are two options - stock company or a limited liability company Chinese enterprises basically. Stock company and limited liability company can provide limited liability protection for the real owners, according to the USA federal tax law, when foreign enterprises built or owned, both must pay the same tax. The company was founded on the specific jurisdiction, 4 's choice, Cole usually recommended in the choice of the various state laws to make analysis, determined to provide state law in acquisition under the proposed all the advantages and disadvantages.

China Company must make the final decision, relevant entity is as the acquisition of a Usa Inc (whether corporation or limited liability company) in the establishment of should as a USA domestic holding company Affiliated Companies or directly to the China enterprises possess? Cole thinks that incorporated in Delaware by a China enterprises directly all the American domestic holding company from the operational and strategic perspective can bring many benefits.

5 set the terms of the deal, letter of intent, the memorandum of understanding or the list of clauses

    Once the buyer and Target Corp is required to pay the price and value of the terms and conditions of the proposed transaction both sides is very important to discuss, and both sides are of the view that seems to have on the price and terms and conditions agreed or preliminary agreement, most cases, both sides will be discussed as written documents, namely intent usually said, both sides sign a letter of intent. The letter of intent is the acquisition of a written document direction issued by the Target Corp, usually contains a preliminary agreement between the parties. Memorandum of understanding or list of terms is used to written documents, records between the acquisition and the Target Corp agreed in fact, they are all in order to achieve the same goal, let both sides to focus on those shall reach an agreement about the proposed deal, the most important and substantial clause is. Before the letter of intent on the purchase agreement is the sale agreement or the final purchase agreement. Although the majority of the letter of intent intention is not binding, but prior to the acquisition side in the consulting business lawyers and lawyers advice, examination and approval can not sign or make any letter of intent. The reason is that the court has the intent into binding contracts, although the intent intention is not binding.

Letter of intent is in the acquirer and Target Corp have on the proposed transaction prices, terms, conditions and duration of formal discussion draft and signed. Usually, the acquirer to believe you already know the related factors of Target Corp to accept conditions will submit the letter of intent. In many cases, the acquirer will be used as the initial purchase intent based negotiation. Purpose of the book is that when it comes to the main terms and conditions and began to implement the transaction to avoid acquisitions between buyer and Target Corp misunderstanding. You should be a letter of intent as a blueprint, it outlines how the acquisition will be carried out. The letter of intent is not the actual acquisition agreement, the acquisition agreement is after the thing, but in fact it describes the terms and conditions of the most important buyers want to see in the final of the contract. The typical elements of intent are shown below:

Sales and trading forms: acquisition of shares, the acquisition of assets (assets and liabilities would include what what, specifically by the purchase of what is and is not buy) or merger.

Sales and payment terms: the acquisition of money paid (cash, notes, stock and profitability payment plan).

sales and purchase price adjustment: according to the adjustment method over delivery when the finances of Target Corp or the delivery of the net asset value or the amount of working capital to purchase price should care to make provisions to book.

Sales and agreement of prohibition of Business Strife: identity of all shareholders need to sign a noncompete agreement the Target Corp or other key staff and the term of the agreement.

Sales and employment / consulting / management contract: asked all staff sign of such protocols and the identity of the term and pay remuneration.

Advice statement, agreed and approved / agree: the final purchase agreement will include the statement, agreed and approved

General clause type.

Advice about compensation: acquirers will provide general terms of compensation and the compensation the existence of the limit?

The third party payment advice custody: if asked to buy some amount of temporary price submitted to the third party custody, general provisions on temporary submitted to the third party and three party custody custody of the amount of time.

Sales and delivery date: transaction completion time, deadline due diligence and financing, before payment and final settlement time.

Sales and due diligence investigation: until the end of the ledger and recording, key customers and key staff.

The non binding nature of letter of intent for advice: letter of intent without binding and determined to obtain results due diligence satisfactory financing as well as a both sides to obtain satisfactory to buyer.

Sales and exclusive: binding agreements signed by the Target Corp, Target Corp to withdraw from the market and anyone not with intent another party in a certain time period the takeover negotiations.

Sales and breakup fee: if the Target Corp had violated the exclusivity clause or choose not to sign a final agreement is a period of time after the acquisition side issue letter of intent notice of termination and the acquisition of new transactions, requires the Target Corp or its shareholders must pay the cost to the purchaser (usually referred to terminate the agreement cost unilateral).

USA lawyer once the acquirer has written a letter of intent, the acquisition will submit the letter of intent to Target Corp and explain the contents in the letter of intent. The acquirer in the discussion of the offer, it is important to remember that the discussion should involve multiple problems, including the price, terms, financial problems and how long can complete the transaction.

Usually, once the Target Corp agreed to the transaction, the acquirer can more quickly get financing, to complete due diligence, make the sale agreement and to complete the transaction, then the Target Corp change chances. After signing the letter of intent, the general fast delivery can be completed in 90 to 120 days, if there are no major problems, such as environmental problems involved in any real estate assets.

Successful trading is a very time consuming work. In the letter of intent to Target Corp, buyers do not want to

In the Target Corp said "thank you, we will consider the" lax. The acquirer should invite Target Corp cooperative consulting or shareholders attended the meeting and plenty of discussion time, but must clarify its expectation is at least second meeting of non constraint

Letter of intent agreement.

Letter of intent may be relatively time-consuming preparation. Although the letter of intent is usually a very short documents, but still need to be carefully considered. If the correct formulation, the letter of intent is usually not binding. However, even though non binding letter of intent, often so that the two sides have later can change the terms of faith or belief. The letter of intent should understand, once signed, usually both sides it is difficult to change the letter of intent has been formulated and agreed terms and price. Preparation of letter of intent must be cautious, not just because of the letter of intent recording the proposed terms and the relevant personnel that have reached a consensus, but also because of the letter of intent will influence the final transaction protocol.

Sometimes, after substantial clause buyer and Target Corp on the proposed transaction are not signed a letter of intent, but a direct final purchase agreement negotiation. Special care should be taken in this kind of situation, because after spending a lot of time and cost to find substantial clause the acquirer or Target Corp in the transaction does not agree.

The 6 method of trading, asset acquisition, stock acquisition and merger

As mentioned above, the draft letter of intent and submit it to the Target Corp, the acquirer will point out the transaction in the form of letter of intent. In America, there are three major forms of business basically: asset sale, sale and merger.

(a)The sale of assets

In American, asset sale is the most prevalent form of business sale. The main reason is the acquirer to determine what they will buy the debt. The sale of shares to buy the entire company and merged entity, including the assets and debts (known and unknown debt). Unlike the stock sale or merger, sale of assets usually can protect the acquisition shall not sell the entity responsible for the debts of the acquirer, clear debts and the acquirer in the asset sale is considered except for default to bear part of the debt. Generally speaking, in addition to the acquirer in the agreement that the debt to buy assets, all other debt acquisition of Target Corp are not responsible, except in certain cases, the acquirer may be responsible for the Target Corp's products debt, state taxes, unemployment taxes, employment related pension debt, debt, environmental problems and the part of the federal tax. The sale of assets cause second transaction form of universality is the acquirer to enjoy the tax base more on equal to the purchase price to buy assets. Acquisition of the assets of the corresponding American tax base makes the acquirer to additional depreciation deductions form benefit, and additional depreciation deductions are usually transformed into the acquirer's festival tax, other transactions may not exist the benefits.

(b)The sale of shares

The second kind of business form is the direct sale of shares of the Target Corp, namely: the shareholders of the Target Corp to sell the shares to the acquirer. This form of transaction is usually affected by the sale of favour, because the selling party can get favorable tax treatment and the form of the transaction are generally thought to be more simple, easy to implement. As mentioned above, the sale shares in 8 , takeover is the entire enterprise, including all known and unknown debt, so this form of transaction is usually not to buy favour.

(c)Merge

And the sale of shares in the form of similar, merger, purchase is the entire enterprise entity. In the merging process, a business survival, and other one party is merged and cease to exist. And sale of assets and shares, and also requires the two sides to reach an agreement. In three kinds of enterprise business forms, and seems to be the least used, usually only for public acquisition of listing Corporation or any other of the following: minority shareholders do not support the sale of the company or any other reasons, for example, cannot be transferred or the sale of shares in major licensing, contract or other assets would be involved.

7 legal due diligence 

    Once signed a letter of intent, the acquisition and convenient process needs to perform a so-called due diligence. Due diligence is a detailed investigation of the Target Corp and its assets, liabilities, claims, contracts and prospects. Due diligence is the concept of the Target Corp and its assets and liabilities to conduct a detailed and thorough investigation to determine all the problems existing and potential problems of Target Corp and Target Corp are there any hidden assets or income is not obvious. According to the scale and nature of the Target Corp, due diligence may spend a lot of time, but also to ensure that the actual situation of Target Corp and its own information provided is consistent, no doubt, for the acquirer, due diligence is the proposed deal, the most important segment. The due diligence process begins from the signed a letter of intent, continued until the transaction delivery time. In the whole process, the acquirer tries to answer the following basic questions: "whether we should continue to purchase?" "Whether we should still press the letter of intent shall pay a price?" "Whether we still acquisitions are expected to trade form letter of intent?" "The presence of certain liabilities or worry about problems need to be solved in the acquisition agreement?" "How should we deal with the operation, accounting and legal problems after the acquisition?" "Representations and warranties of Target Corp will be made in the final in the purchase agreement is subject to?"

Due diligence process will involve all members of the USA acquirer buys a group, each member is responsible for different jobs. Overall, the legal due diligence American business law execution will involve a variety of issues related to the Target Corp and the business of the detailed and thorough examination, including:

AdviceAn important contract Target Corp, the purpose is to determine the important, substantive provisions of contract, such contract is transferred to the buyer, and the possible need for consent or approval.

AdviceLien and property to investigate the existence of Target Corp assets, in order to liens and claims to terminate or determine the release delivery of outstanding and determine the Target Corp Is it right? Such asset registered legal owner.

AdviceThe Target Corp real estate assets property report, to determine the expected for the Target Corp of all real estate property status.

AdviceTarget Corp control file, including the company's articles of association, rules and operating agreement, the shareholders' agreement, voting protocol and share ownership records.

AdviceTax declaration and tax payment Target Corp, to verify compliance with all applicable laws and that the delivery may influence the buyer or buyer may be inherited, need to be responsible for all tax liabilities and tax issues. A certain state taxes, the acquirer may ask the Target Corp to obtain a copy of the acquired enterprise tax credit good letter or a certificate of Target Corp has paid some states tax from the corresponding state organs (such as sales tax, use tax, withholding tax, tax on cigarettes, motor vehicle fuel tax and income tax) tax payment proof. Sometimes, the acquirer may require the Target Corp responsible for the unpaid tax.

Advice is issued to Target Corp for important business license or license.

Sales and agreed to important obtained to complete the transaction settlement.

Employment documents, sales and Target Corp employment agreements, employment, employment benefits, manual labor agreement and other important documents associated with the employees or agreement.

In the due diligence required by the implementation of the time, America legal due diligence investigation group and America certified public accountants working group will work closely. 8. final purchase agreement

After signing the letter of intent, the acquirer will usually require the business lawyer began preparation and consultation to the final acquisition agreement. Generally speaking, the intention will indicate the proposed transaction form, whether the Target Corp issued shares to buy, or Target Corp all asset purchases, mergers and acquisitions of Target Corp or enterprise. Acquisition agreement acquisition (if the contents of the sale of shares in form, the acquisition is all stock; if the form, the sale of assets acquired content is all assets) is described and includes all rights and obligations with the acquisition of other terms and conditions of contract and party.

According to the Convention, the acquirer finalization of the draft agreement first. As a buyer, not the right to the Target Corp or its lawyers. Both the asset purchase agreement, share purchase agreement or a merger agreement, the final purchase agreement typically consists of the following provisions:

AdviceAsset acquisition to the acquired assets and liabilities definition and description; or acquisition of shares trading on the definition and description of shares acquired.

AdviceThe acquisition price and terms of payment, delivery or delivery of the purchase price adjustments, and this kind of price adjustment decision procedure.

AdviceProvisions relating to buy some amount of price for third party escrow funds or withholding funds, Target Corp for the acquirer default payment of claims.

AdviceProfitability pay description and operation, part of the purchase price shall be the amount paid to delivery requirements for achieving the goal of conditions.

AdviceA detailed statement and guarantee of Target Corp and / or its shareholders do, include the following contents:

The implementation of O transaction authorization and power

O Target Corp organization and capitalization

O Target Corp debt

O affect any litigation Target Corp or any proposed transaction

The o property

O intellectual property matters

O products and the warranty liability

O environmental problems

O labor issues

O financial statements

O legitimacy and many other Target Corp and its business and assets

AdviceA set of disclosure schedule Target Corp system, exceptions include representations and warranties.

AdviceCertain terms and negative terms, most of these terms require Target Corp to take some action, such as to allow the acquirer into the Target Corp to conduct due diligence, and the prohibition of Target Corp in some behavior before delivery, such as signing beyond the normal scope of business contract.

AdviceDelivery conditions, many of these conditions is about the acquirer should end the transaction before acquiring necessary regulatory approval and third party consents, representations and warranties to maintain accuracy and no adverse change significantly in all material respects.

Sales and acquisition financing requirements (especially for the acquisition price seller financing) and obligations to acquirers in the final purchase agreement to acquire the whether is the takeover price or delivery after operation of the Target Corp to obtain financing conditions.

Sales and after delivery, because Target Corp violates state, guarantee and agreed that acquirers suffer loss and damage of the acquirer Target Corp for compensatory obligations and all other explicit or specially negotiated compensation.

(a Target Corp for breach of representations and warranties to the buyer to pay compensation, usually have a fixed period 12 limit, must be in the period to file a claim. The level and the amount of the Target Corp, liability limit, set a lower limit and upper limit, lower limit unless more than Target Corp, otherwise has no liability, and once exceeds the limit, Target Corp also has no liability. Indemnity clause is often the most difficult to negotiate a final acquisition in terms of the agreement, matters is usually the Target Corp hopes to negotiation in the letter of intent in advance)

9 government approval or notification

USA antitrust approval

  Whether the buyer is USA enterprises or foreign enterprises, notify the buyer and Target Corp must determine whether to complete the transaction must obtain the applicable federal or state license or must provide. Shall obtain an approval is the most commonly used "Hart - Scott - Rodino antitrust Improvement Act (1976) under the" approval, the law requires regulatory filing and review to meet certain requirements of the transaction. Under the act, if a deal to meet the standard requirements, the acquirer and Target Corp to submit it to the Ministry of justice USA review. Can refer to the following three standards to determine whether need to submit the application for approval:

Sales and commercial standards. If the acquirer and Target Corp in USA engaged in commercial activities or engage in any activity America business, will meet the standard. When the Target Corp's residence in USA, usually meet the standard.

AdviceThe standard trade size. If the securities or asset acquisition for acquisition will hold voting

Value of more than $68200000, with the standard.

AdviceStandard corporate scale. If the size of transactions of more than $68200000 but not more than 27280 million, and one party to the transaction legal hold total assets or its annual net sales of not less than $136400000 while the global total assets or annual net sales of another person is not less than 1360 million, will meet the conditions. Value of more than $272800000 in trading are required to report, has nothing to do with the corporate scale.

If you meet the above criteria, requires the acquirer and Target Corp to submit an application to the Ministry of justice and the Federal Trade Commission America. The Department of justice and the Federal Trade Commission under the federal antitrust approval to further review of the decision or action is needed to complete the transaction applications, not during the period of 30 days. However, the review mechanism through the "letter issued ahead of the end of" reduce the examination time, or if the review body that need additional information and issued the "two letter" request to provide such information, can lengthen the waiting time.

    According to the size of transactions, the acquirer has the obligation to pay the application fee, the acquirer and Target Corp consensus, the application fee can be paid in full by the Target Corp. The fee structure is as follows:

Sales and trading value greater than $68200000 but less than $136400000 =$45000.00

Sales and trading value greater than $136400000 but less than $682100000 = $125000.00

Sales and transactions worth more than $682100000 = $280000.00

According to the "Exxon - Florida Austrian act" of American approval

About whether it should be based on "foreign investment and National Security Act (2007)" and "the final regulations (Exxon - Florida Austrian act) (2008)" will be submitted to the Committee on foreign investment in the proposed transaction American acquisitions inventory, Chinese acquirers should consult American legal adviser. In the "Exxon - Florida Austrian act", USA president has broad authority to review all "within the scope of the transaction", these transactions include "may lead to foreign enterprises have control over all the merger, acquisition and receive the USA interstate commerce corporation". After reviewing the transaction, if the president believes that the transaction on the national security threat and cannot be solved by other methods, the president can stop the transaction or take other measures to protect the automatic America national security.

 

If the proposed transaction will lead to foreign entities to America enterprises "control" and may cause the political or security related risks, Target Corp and acquirer should consider the proposed transaction reporting to the Committee on foreign investment in USA. If the control of the enterprise from Chinese, Russia and the Middle East countries, the transaction will be subject to more stringent review. In addition, if the acquired America enterprises involved in "key infrastructure" or "key technology", the company should consider to report to the Committee on foreign investment in USA, because presumably, foreign control of such enterprises will lead to consider the national security related.

"Control" in "Exxon - Florida analysis of Austrian act" is a key concept, because the power from all the bill with foreign enterprises to America interstate commerce legal "control" conditions, including foreign investment commission audit or investigation of trading power as well as the president to take measures suspend or prohibit trade power. Although the national safety regulations require that the inherent flexibility greatly, but not up to "control" condition is unable to meet the "official standard Exxon - Florida Austrian act". But the "control" is a very broad concept, may exceed the traditional ownership standard.

Ownership and control ability of board seats and all associated with the "control" analysis. A comprehensive consideration of all relevant factors, the factors that may affect the decisions on important matters, foreign legal persons and entities related to the command and decision-making ability. In some cases, if there are specific control characteristics and these characteristics are not typical of this loan, the loan might trigger a "change of control". In addition, below the 10% investment can also be considered "within the scope of the transaction", if there is evidence that control of the entity was obtained by trading.

Although the report will involve foreign investment transactions to the Committee on foreign investment is voluntary, but in control America involving foreign companies of enterprise, good company policy requires the parties to the proposed transaction to accept the review procedure. For not reporting or without foreign investment review board takeover, the Committee on foreign investment in the future of the reserves the right to review. In addition, unreported censorship may intervene in the USA government result in the transaction, transaction cancellation or impose restrictions on trading, which may lead to significant changes in the terms of the deal. Do not provide public notice relating to the examination, all information is strictly confidential, except as required by certain administrative or judicial action.

"International arms trade regulations under the" approval America defense when it comes to buy a by the "international arms trade regulations" control of the company, the parties to the transaction must be reported to the Department of defense before the acquisition American. If the acquisition of foreign enterprises will lead to such Usa Inc "control", the transaction must be in delivery before reported to the State Council American 60 heaven. Buy a house of such Usa Inc with at least 20% of the assets or the voting securities are foreign entities on the purchase of "control".

The acquirer shall bear in mind, if the Target Corp had violated in the purchase before export control regulations, America Council will not hesitate to require buyer bear the successor liability. Export control violations may be millions of dollars in fines. Therefore, before deciding to buy a by the "international arms trade regulations" control of the Usa Inc to export regulations in line with the due diligence of the acquirer is very important.

 

Chinese government approval

Chinese overseas investment need approval China supervision department, one of the most important departments including the national development and Reform Commission, the Ministry of Commerce and the State Administration of foreign exchange. In addition, the state-owned enterprises may also need to obtain approval for the state owned assets supervision and administration commission. Only after approval of relevant institutions, overseas investment related contracts and agreements to take effect. On such matters, the China Company should consult senior legal counsel and guidance Chinese.

10 transactions delivery

Once the final agreement and meet all terms of delivery, buyer and Target Corp will be meeting (called "delivery meeting"), all need to sign and the delivery of documents and other items (including the acquisition price delivery) were transferred at the meeting. Delivery is the official transfer of enterprises. Simplified cannot delivery process, also cannot unilaterally, committed in the critical moment such stupid mistake may need to purchase or the Target Corp will pay ten times the price. In some small transactions, delivery process may only take a few minutes, but in a large and complex transactions, can spend hours, even days.

For the completion of delivery, to complete the work may be, usually includes the following content: the shares or assets transfer, has been confirmed for all the permissions required from the third party, sign all transaction documents and attached documents, submit to obtain officials and directors, confirming all lien release, signed by all the requirements of the financing and loan documents all the terms of delivery and payment, confirmed the acquisition price has to meet. In order to ensure the smooth delivery, the best method is to prepare a list of all the necessary items delivery, execution shall specify the delivery.

The acquirer US lawyers will supervise delivery process.

11 conclusion

Generally speaking, if the target is a large-scale, complex enterprise, the acquirer may take six months or longer to complete the whole process of the above. However, if the buyer the right way to complete the process and is equipped with a good American M & a team (this will ensure you before the deal was done as much as possible about the situation, then the Target Corp) gains may be considerable. In the whole process, the acquirer should be ready at all times to withdraw from the transaction, although this may be expensive and painful, but don't give up transactions and the purchase of an error of Usa Inc, the price is not what, because of a wrong purchase will be acquired the most expensive mistakes committed.

The Chinese enterprises, USA full of opportunities. However, as with anything in business enterprise, the acquisition America risks exist, only in good USA legal and financial advisors help and in the right way to complete the acquisition process, the risk to get effective control and management.