When Chinese investors acquire overseas family-owned companies, post-acquisition motivation of the family members can be problematic, warns a legal expert recently involved in such a deal.
Eric Lin, a partner at Simmons & Simmons, advised Gangtai Group, a leading privately owned conglomerate in China, on its recent acquisition of an 85% stake of Buccellati Holding Italia, a prestigious Italian luxury jewellery brand with close to 100 years of history. Buccellati was previously owned by Clessidra SGR and the Buccellati family.
“One common issue that Chinese investors may come across is on how to motivate the family members or founders post-acquisition,” Lin, who is also head of the firm’s Beijing office, told China Business Law Journal. “It can be done through various structures, ranging from minority shareholding to incentive schemes.” He added that many Italian or European luxury brands were in the hands of family owners.
“The tightened regulatory environment also represents a major challenge for cross-border M&A transactions,” said Lin. “Early planning on the acquisition and funding structures will be useful to avoid any late stage surprises.”
The transaction moves Buccellati into one of the most prominent jewellery groups in China with the potential to expand the brand globally.
Simmons & Simmons advised Gangtai Group on this deal, with the firm’s Italy-China team led by Lin in Beijing and partner Dario Spinella in Milan.