CHINA Law and Practice Contributed by: Shuting Qi, Han Kun Law Offices
• Due diligence (financial, legal, operational) will take one to three months depending on scope. • If triggered, antitrust review and national security review will extend the timeline by months depend - ing on complexity. • SOE transactions require additional SASAC approvals that can extend overall timelines. • For listed-company transactions, the timeline for CSRC major asset restructuring review is variable, but has been materially shortened for transactions qualifying for the simplified review procedure intro - duced under the 2025 Restructuring Measures. For private company M&A, the process typically rang - es from a few months to over a year. Transactions involving SOEs often take longer due to the manda - tory public listing and auction process and additional approval requirements. For listed-company acquisitions: • Negotiated acquisitions with straightforward struc - tures may complete within three to six months. • Tender offers require a statutory offer period of no less than 30 days and no more than 60 days under the Takeover Measures, with the overall process typically taking six to 12 months. • The timeline for complex transactions requiring antitrust review or CSRC approval may extend to 12 to 18 months. 6.2 Mandatory Offer Threshold Subject to a few statutory exemptions, an acquirer whose voting rights reach 30% and that continues to increase its shareholding must make a general or partial offer. If it is acquiring more than 30% by agreement, a general offer is required for the portion exceeding 30%. In practice, sophisticated acquirers commonly struc - ture deals to stay just below 30% to avoid triggering mandatory offer obligations altogether, then use vol - untary partial offers to consolidate control. 6.3 Consideration In China’s M&A market, cash remains the predominant form of consideration due to its reliability and sim - plicity, particularly in private company M&A. However,
share-based consideration is increasingly common in listed-company acquisitions, especially for large-scale strategic mergers where listed companies use their own stock as acquisition currency. To bridge valuation gaps in uncertain environments, practitioners commonly employ the following: • Valuation adjustment and escrow service: Comple - tion accounts mechanism and locked-box mecha - nism to adjust the purchase price; a bank’s escrow service is often used in such context. • Earn-outs: Structuring contingent consideration based on post-closing performance milestones to align incentives and mitigate overpayment risk. These tools, combined with robust due diligence methodologies, help parties navigate valuation uncer - tainty and reach consensus. 6.4 Common Conditions for a Takeover Offer For M&A in China, common tender offer conditions include: • internal corporate approval, eg, shareholder approval; • regulatory approvals; and • absence of material adverse change. In a public M&A, the CSRC strictly restricts the use of offer conditions. Under the Takeover Measures, once an offer is announced, the bidder may only impose objective and verifiable conditions, while subjective conditions are prohibited. Core offer terms such as price, quantity and period are fixed and may only be varied in limited circumstances and with CSRC approval, ensuring certainty for shareholders through - out the offer period. 6.5 Minimum Acceptance Conditions Setting a minimum acceptance condition protects a bidder from acquiring a non-controlling stake while preserving flexibility in deal structuring. To ensure absolute control over a target, a minimum acceptance condition of 50% may be set, particularly for a target with dispersed ownership.
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