Illustrative Engagements

ALC’s professionals have acted as advisor or principal in scores of transactions in China over the last 30 years. ALC has researched and screened thousands of Chinese companies across a broad range of product groups and industries. The following are some recent illustrative representations:

Specialized Industrial Component Manufacturer: strategy development and implementation, and M&A assistance for a portfolio company of a US private equity group that manufactures a specialized industrial component. Among other things, ALC performed a manufacturing feasibility analysis and determination of cost savings for sourcing from China. ALC researched current activities and plans of competitors and the current and potential Chinese market for the client’s product. ALC was able to ascertain the plans of several of the client’s customers for moving production to China and selling into the Chinese market. ALC screened candidates for acquisition of a manufacturing platform for the client. ALC identified and assisted in negotiations with a candidate that not only manufactures comparable products to the client’s specifications and quality requirements, but also possesses manufacturing technology that the client has unsuccessfully sought to acquire in the US.

Express Delivery Company: strategy development and M&A assistance for a US based express delivery company in finding, screening and negotiating a strategic partnership with a China based delivery company as part of a global parcel delivery alliance. ALC screened scores of delivery companies, led negotiations with a “short list" of partner candidates, assisted in the development of business and operating plans, assisted in arranging test cases, and developed the process for determination of the partner and terms of the alliance, including financing.

Safety Products Manufacturer: M&A assistance for a US based manufacturer of safety products, including analysis of potential cost savings and evaluation of China as a manufacturing and distribution base. ALC assisted in the development of a China strategy for the client. ALC found and screened candidates for acquisition and assisted in persuading the successful owner/managers to sell their growing business. ALC acted as “deal quarterback" on the ground in China for the acquisition. ALC developed innovative structuring that significantly reduced the tax burden on the target, and coordinated all local services providers, including lawyers, accountants, registration agents, and executive search firms. ALC assisted in developing innovative incentive schemes to retain management and align economic interests.

Specialty Components Manufacturer: M&A assistance for a US based manufacturer of specialty components for cabinets and office products. ALC acted as exclusive M&A advisor and “deal quarterback" for the simultaneous acquisition of two add-on acquisitions—one in Taiwan and the other in Guangdong Province. ALC performed fact finding and financial analysis, developed buy or build analyses, performed background checks, engaged and coordinated local lawyers and accountants, drafted preliminary and definitive bilingual documentation, assisted in structuring and negotiating the transactions, and managed the relationship with sellers.

Shanghai Symphony Orchestra: strategy development and implementation for the Shanghai Symphony Orchestra (SSO). The SSO is committed to developing one of the premier symphony orchestras in the world to match Shanghai’s increasing importance as an international financial and business center. The SSO is undertaking the construction of an impressive new venue. Among other things, ALC assists in the development of the strategic, business and fund raising plans for the SSO and works with major international donors.

Private Equity Firm / Light Manufacturing Start-Up: strategy development and implementation for a private equity firm to create a low cost manufacturing supply and sourcing base for a light manufactured product group for sales and distribution in Western markets. ALC found and screened manufacturing partners/acquisition candidates. ALC assisted in negotiations for the acquisition of three candidates. ALC advised on the design of a China purchasing organization (CPO) to oversee owned operations and manage supplier relationships and assisted in implementation of the CPO. In addition, ALC assisted in finding, screening, hiring, and training staff for the CPO and accelerated the implementation of the CPO by acting as an “incubator" for it and providing a business license for hiring and other purposes.

Private Equity Firm / Office Equipment Target: pre-bid fact finding and analysis for a private equity group, with regard to the China aspects of a potential acquisition of a US based office products company, including China site visits and interviews with Chinese and US management, background checks on key China personnel and suppliers, and research on customers and competitors of the target in China. ALC uncovered critical errors and omissions in the bid package materials, including underestimation of the cost of acquisition of the target’s China supply base. ALC’s report included analysis and quantification of potential additional cost savings, latent competition from emerging Chinese competitors, and a preliminary strategy outline for post-acquisition operation of the target’s China operations.

Private Equity Firm / Medical Products Start-Up: transaction support to a US private equity firm in connection with the acquisition of the assets of two manufacturing businesses in China in the medical products sector, including preparation of certain legal documents, supervising local legal counsel and local accountants, reviewing and translating financial statements and other information into English, reconciling financial information with US GAAP, due diligence investigations, review of manufacturing and supply chain processes, background investigations on management and Chinese investors, assistance in negotiation of option and purchase agreements, and assistance in closing the acquisitions. ALC’s support enabled successful and timely closings of the transactions at substantially reduced transaction costs.

Fortune 500 Branded Products Company: M&A assistance for a Fortune 500 branded products company in acquiring its domestic Chinese distribution business, including preparing business models (Greenfield vs. acquisition) and valuations, conducting due diligence, advising on structuring and assisting in negotiations, and assisting in forming the client’s Chinese legal entity (FICE) and in transitioning the existing distribution operation to the new entity. ALC’s in-house accounting and legal professionals prepared the legal documentation, and ALC screened, helped select and managed local Chinese accounting and legal professionals.

Shanghai Aerospace: strategy development for Shanghai Aerospace Industry Co., Ltd. with regard to strategy for its commercial businesses, including advice with respect to specific transactions, an international strategic partner search, and financial structuring.

Aluminum Products Manufacturer: strategy development and implementation and M&A assistance for a portfolio company of a major private equity company in developing a China business strategy responding to a major challenge from a Chinese manufacturer in its product sector. ALC provided competitive intelligence, performed a market study of the Greater China market for the client’s product, and found and screened acquisition candidates. Among other things, ALC ascertained the detailed plans of a well financed Chinese competitor to aggressively and directly enter and dominate the client’s US market. ALC provided a strategy and detailed roadmap for a competitive response, including acquiring a domestic Chinese manufacturer and setting up a CPO and sales and distribution function for the Greater China market.

Heavy Equipment Manufacturer: strategy development and implementation for a US manufacturer of heavy equipment in a new and burgeoning market sector in China, including fact finding and the development of a model to project future growth, preparing a manufacturing feasibility study, advising on a business venture with a strategic Chinese partner, and developing an intellectual property protection program for the client’s leading edge technology.

Fortune 500 Office Supply Company: strategy development and implementation for a Fortune 500 company in developing its strategy for migrating manufacturing to China, screening potential partners, and assisting in selection of and negotiating the terms of a partnership with a strategic manufacturing partner. The Chinese partner is now manufacturing and shipping product according to specifications and further migration of manufacturing by the client to the Chinese facilities is underway.

Automotive Parts Manufacturer: strategy development and implementation for an automotive component manufacturer owned by a major private equity firm to develop a strategy for selling into the China market and sourcing, including designing and assisting in implementing a CPO. Services included analyzing manufacturing feasibility, ascertaining the plans of major vehicle manufacturers for localization of production of the client’s product and identifying current Chinese companies manufacturing and supplying the client’s product in China. ALC found and screened potential acquisition candidates to provide a platform for the client’s migration of production to China. Among other things, ALC discovered that major current OEM customers of the client were purchasing the client’s product from domestic Chinese manufacturers and that technical specifications had been modified for production in China.

Major International Private Equity Group: fact finding, competitive assessment, verification of China market strategy, and pre-bid due diligence investigations in connection with a bid by a major international private equity group for a public company with over $1 billion in sales. The target’s China operations involved a joint venture with a state owned enterprise (SOE) that supplied 40% of the product for its international markets. Among other things, ALC provided a comprehensive assessment of the China partner’s performance and reputation, management, plans for ownership change on the China side, operations, locations, logistics optimization, IP protection, and compliance with agreements.

Private Equity Group of a US Investment Bank: pre-bid fact finding and assessment in connection with the acquisition of a manufacturer of a branded sewn product by the private equity group of a major US investment bank. Among other things, ALC conducted site visits to the target company’s Philippines sourcing partner’s facilities and compared the company’s Philippine outsourcing strategy and operations with a suggested China outsourcing strategy. The target company was acquired and has shifted its outsourcing to China.

Commercial Door Manufacturer: ongoing monitoring and trouble shooting with regard to a Chinese business acquired by a portfolio company of a US PE firm, including assistance with local tax issues, regular meetings with Chinese managers and reports to the US parent, assistance with bank accounts and distributions of cash from China, and dealing with other regulatory and personnel issues.