MoFo Asia Buyouts and De-SPAC Analysis

Following the publication of our previous Asia Buyouts Report, for our latest report we have analyzed the main terms of 34 Asian buyout transactions and 18 de-SPAC deals involving targets in Asia from July 2020 to November 2021. The research has revealed some interesting trends in deal terms. Please sign up for our webinar at 9:30-10:30am China Standard Time on 26 May 2022, at which MoFo partners Maureen Ho, Marcia Ellis, and Ruomu Li, as well as associate Yilong Luo will share the results of our annual Asia buyouts and de-SPAC analysis. 

Asia Buyouts

2021 marked a year during which the volume of buyout activities surged and both buyers and sellers were more aggressive in negotiating transaction terms.

In our analysis of the main terms of 34 Asia buyout transactions, we saw how financial and strategic sellers reacted differently as the impact of COVID-19 on the performance of their portfolio companies or subsidiaries became more pronounced. We found that the primary focus of buyers and sellers was still deal certainty, but we saw noticeable shifts in the other terms concluded in bilateral buyout transactions.

For example, to bridge valuation gaps between parties, PE buyers and sellers are agreeing to:

• Post-completion “true-up” adjustments;
• Deferred consideration mechanics; and/or
• Performance-linked or price adjustment-linked escrows.

We expect buyout activity throughout Asia to remain robust in 2022.

Asia De-SPACs

2021 was also a rollercoaster ride for SPACs and de-SPACs globally. How did this play out in Asia? We analyzed trends in 18 de-SPACs involving targets in Asia, including:

• How economic terms (such as valuation of targets, earn-ins, earn-outs, minimum cash requirements and various forms of commitments of PIPE support by sponsors) have shifted as an escalating number of SPACs chased fewer targets and public market and PIPE investor sentiment toward SPACs deteriorated; and
• How the advent of Hong Kong listed SPACs may impact the entire SPAC market in Asia, given that Chinese targets are likely to favor Hong Kong listed SPACs for various regulatory-related reasons.

To receive a full copy of our latest “MoFo Asia Buyouts and De-SPAC Analysis” or if you would like to request a training session for you and your team,please email Carrie Lau at clau@mofo.com.