Mitigating Risks from Today's Investments in China: Due Diligence Practical Pointers for Private Equity Firms

In spite of the challenges, private equity investment activity in Asia remains strong, setting new records the past few years in total deal and exit value. Meanwhile, as the competition for quality investments has intensified, deal schedules have been compressed, causing some private equity firms to cut back on their compliance due diligence.

At the same time, recent developments in the policies and enforcement actions of the U.S. government demonstrate a priority of targeting China-based companies, an appetite to go after private equity managers for the misconduct of their portfolio companies, and thus a more compelling need for robust due diligence. In this Client Alert, we share our observations on the changing compliance risk landscape in China and offer some practical suggestions for conducting effective due diligence.

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