CHINA Trends and Developments Contributed by: Steven Yu, Jeffrey Zhu, Jia Guo and Stella Jiang, Global Law Office
technological innovation and business upgrades – ultimately enhancing their core competitiveness. According to PwC’s China M&A 2024 Review and Outlook, China’s M&A deal volume fell to a multi-year low in 2024, down 16% from 2023 to USD277 bil - lion. However, from late 2024 onwards, the market has received continuous policy support, and M&A deal value in the second half of 2024 jumped by one- third compared with the first half, reaching USD158 billion. In the first half of 2025, a total of 171 PE/VCs successfully exited through M&A transactions, with capital returned to funds surging to CNY43.065 billion. Despite the above advantages of M&A transac - tions, certain legal issues may need to be considered regarding the design of the deal structure of the M&A transactions. For example: • when foreign investors acquire equity interests in Chinese enterprises, domestic sellers can only receive payment of the purchase price after the completion of the share transfer registration, and when the sellers are Chinese individuals, they even need to complete the individual income tax pay - ment before registering the share transfer. These procedural requirements may constitute substantial risks for domestic sellers; • when a listed company is involved in the M&A transaction, special attention should be paid to the possible approval and disclosure requirements.
When an acquirer takes a stake in a listed com - pany, it will trigger disclosure obligations under Chinese securities law; on the other hand, when a listed company undertakes a cash acquisition, regulators require a transaction size review to determine the applicable procedures, which may include board or shareholder approvals, disclosure requirements, and audit or valuation conditions; and • antitrust filings are a critical and often mandatory step in M&A transactions, particularly for deals that may substantially reduce competition in a relevant market. Timing is a key consideration here: the fil - ing process can take several months, and transac - tions cannot legally close until regulators complete their review. If a transaction is likely to substantially lessen competition, it may face remedies or even prohibition, which could severely affect the parties’ rights and the transaction. In conclusion, while China’s PE/VC exit landscape faces challenges such as stricter IPO reviews and low share buyback recovery rates, the growing policy support and structural advantages of M&A transac - tions offer a relatively promising alternative. With the entry of patient capital, the transformation of institu - tional investment strategies and the regularisation of the market environment, we believe that China’s M&A market will continue to develop, and M&A transac - tions will be not just an exit route but, more impor - tantly, a way to re-create and release value.
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