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Good post on CLB touting a Steve Dickinson article on current M&A law and the probable effects of the new AML. I agree with the general content and only have one additional comment with respect to the following paragraph:

Steve describes China as "remarkably receptive to direct foreign investment that creates new business activity in China," but opposed to purchases of successful existing businesses and assets. "Such purchases are strongly disfavored, since they are seen as providing no net benefit to China:"

Under this policy regime, venture capital and troubled company buy-out businesses have plenty of room to operate. Strategic alliances in core industries also work well. On the other hand, traditional private equity that focuses on the outright purchase of strong and successful companies simply does not work under this system. Central government regulators will consistently step in and exercise their veto powers to prevent the foreign acquisition of a majority interest in any existing, strong Chinese company. This is not likely to change anytime soon.

Generally true that investors still have room to maneuver, but this is not the case in some highly-regulated industries, such as IT/telecom. Unfortunately, domestic enterprises in these industries are some of the most highly sought after M&A targets and recipients of VC. Big pain in the ass, and no one expects things to get any easier in the near term.

M&A is going to be weird for a little while as everyone waits for the government to implement the new law. We will see whether this leads to a new policy stance or not.

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