Foreign Investors Targeting New Economy Businesses

Mergers and acquisitions (M&A) by foreign investors targeting new economy businesses in China carry some distinctive characteristics compared to "conventional targets". New economy businesses are generally hi-tech or internet-related businesses. These companies are typically small-to-medium sized, privately owned or have a substantial private shareholding, and their assets involve more intangible property or human capital.

Valuation and Verification

New economy companies are difficult to evaluate because of the general lack of benchmark indicators, such as their competitor's market value or their own profit history. It will take time for the Chinese accounting industry to become better versed in evaluating intellectual property (IP) and other intangible assets, as well as business concerns in the new economy.