Chinese corporates question value of advice

By:
Rob Hartley
Published on:

The culture among Chinese companies of preparing and executing their own acquisitions isn’t good news for investment banks keen to charge for services. Will it ever change?

Advice has always been a tough sell in China. The idea of paying for something as intangible as a conversation has never quite been embraced with the enthusiasm seen in other markets, often to the frustration of M&A bankers. 


As returns on investment banking in China have been crushed, the investment banks have been downsizing their teams
  Keith Pogson,
EY

But while Chinese companies may once have lacked the deal-making experience to do anything except cough up the fees, particularly for outbound transactions, bolder firms are increasingly going it alone.

The ability of certain Chinese companies to devise their own search style and conduct the initial due diligence on a target may well be the reason that revenues are dropping while the market seems to be strengthening. Work that in the past would need external advisers for some firms can now be done just as effectively...