QI-TECH: A Chinese Technology Company for Sale
Name: Choi Ying Kai
Date edited: 11-11-2007
QI-TECH, a Chinese manufacturer of precision Coordinate Measurement Machines, is a joint venture established by Indiver BV, a Dutch aircraft engine manufacturer and a Chinese state-owned enterprise QQMF. Looking for a strategic exit, Indiver BV, which holds 50% of QI-TECH, must negotiate a sale with its Chinese partner and a potential buyer, Brown & Sharpe. For this purpose Roger Kollbrunner, the Business Development Manager at Indivers BV, has to develop a viable deal structure and negotiation strategy.
What are the objectives of different parties on the sellers' side? Specifically, what are the objectives of Indivers? Of QI-TECH's local management? Of QQMF? Of Roger Kollbrunner?
Below we state different parties' objectives:
Indivers initially expected at least a 20% annualized return on the investment in QI-TECH. However, QI-TECH currently failed to deliver adequate return (11%) and Indivers lacked the capabilities to further support its technology level and marketing network.
Therefore, they are looking for a strategic exit to retrieve capital yet find another good-fit partner for QI-TECH.
QI-TECH's local management was looking for a future partner that understands Chinese management style and can get along well with them. They worried the new partner might impose their foreign management style particularly with the loss of stakes of QQMF.
QQMF were seeking for further support in technology, marketing know-how and capital from their new partner, in order to improve their operation efficiency and financial outlook. This was because, according to the guidelines of the Communist Party's latest 5-year plan, Beijing could force a major restructuring or shutdown on QQMF if performance is unfavorable.
The sale is part of Roger Kollbrunner's job in managing some portfolio of Indivers to achieve...