私募股权（2026版）

ChinaPrivate Equity Contributor Global Law Office Steven YuPartner|stevenyu@glo.com.cnSteven ZhuPartner|zhuzhiping@glo.com.cn China: Private Equity 1. What proportion of transactions have involveda financial sponsor as a buyer or seller in the transaction terms between acquiring a businessfrom a trade seller and financial sponsor backedcompany in your jurisdiction? One of the main differences between a financial sponsorand a trade seller is the degree of participation in thetarget company’s operation, where, on one hand, thetrade seller (or the founder) is relatively much more activein operating the target company. Therefore, when apurchaser acquires shares from, for example, the founderof a target company, it would expect the founder to makebroad representations and warranties relating to thetarget company’s business and operation. Suchrepresentations and warranties on the operation of thetarget company would normally include due authorizationand capacity, full, complete and accurate disclosure of The transaction value of Chinese M&A market in 2024declined by 16% compared to 2023with the totaltransaction volume in 2024 increased by 24% comparedto 2023, due to a significant rebound in venture capital(VC) activity, according to the PwC China M&A 2024Review and Outlook (the “PwC 2024 Review”), however,for the first half of 2025, China’s M&A transaction value The PwC 2024 Review shows that, in the year of 2024, theannounced aggregate deal value of Private Equity (PE)firms fell to US$121 billion, involving 1,041 deals (whichshows a value decline of 18% and a volume decline of11%, each as compared to the respective figures in 2023)and the announced aggregate deal value of VCs fell toUS$2.3 billion, involving 6,125 deals (which shows avalue decline of 23.3% and a volume increase of 62.6%,each as compared to the respective figures in 2023),while the announced aggregate deal value of strategicbuyers fell to US$130.9 billion, involving 3,116 deals(which shows a value decline of 10% and a volumedecline of 4, each as compared to the respective figures 3. On an acquisition of shares, what is theprocess for effecting the transfer of the shares On one hand, the transfer of shares by foreign investorsin a non-public limited liability company will becomeeffective once parties register with the StateAdministration for Market Regulation or its competent escrow, and etc. On or prior to the signing of the purchaseagreement, the purchaser can provide to the seller equitycommitment letters (signed between the purchaser’sparent fund and the purchasing entity) and/or debtcommitment letters (signed between the borrower who isthe purchasing entity and the lender who is thepurchaser’s parent fund ) evidencing that the purchasingentity will be made available sufficient funds from itsparent fund to make the acquisitions. The sellers in somecases might also request the buyer’s parent to provide itsfinancial statement or bank deposit certificates/bankcredit certificates, although such request will usually face Administrative Measures for Foreign Investment Accessby the Ministry of Commerce (“MOFCOM”) and theNational Development and Reform Commission (asamended from time to time, the “Negative List”).Otherwise, pre-approval or special permit from theMOFCOM shall be obtained before any transaction takingplace. On the other hand, acquiring shares of public listedcompanies through secondary market involvesregistration with the China Securities Depository andClearing Corporation, while acquisition of certainthreshold percentage (e.g., 5%, 20% and 30%) of shares ofpublic listed companies will impose on an investordifferent levels of obligations to report to the ChinaSecurities Regulatory Commission (the “CSRC”). After thecompletion of a private company’s share transfer, parties 5. How prevalent is the use of locked box pricingmechanisms in your jurisdiction and in what The two commonly used pricing mechanisms in M&A(and private equity) deals in China are locked boxapproach and completion accounts approach. Whenapplying the locked box approach, the purchase priceagreed upon by both parties is a fixed price. In thecompletion accounts approach, the purchase price will beadjusted after closing in accordance with the financialstatements of the target companies on or immediatelyprior to the closing audited and confirmed by thePurchaser. Currently, they are both widely used in China.In general, the locked box approach is more preferrable bysellers because the purchasers will have to rely on thefinancial statements prepared by the sellers as of thedates mutually agreed upon by both parties prior tosigning to determine the enterprise value of the target 4. How do financial sponsors provide comfort tosellers where the purchasing entity is a special In transactions where the purchasers are prestigiousfinancial sponsors with extensive financial resources, thesellers might agree to sign an agreement with the specialpurpose vehicle without