[ Editor's Foreword ] Jiang Xiao, Partner and Senior Vice President at Shanghai Dongzhou, discusses the expansion of the international assessment business.

  The expansion of international valuation services has evoked deep emotions in Jiang Xiao. Summing up the international valuation projects he has “led” over the past few years, he proposed that Chinese appraisers should play four key roles in international mergers and acquisitions: Negotiation consultant, domestic regulator, asset investigator, financial reporting specialist 。

    The first role is that of a negotiation advisor. In the early stages of a project, the appraiser should actively participate in initial communications and provide the acquiring party with a reasonable, market-based valuation range. After engaging in due diligence, the appraiser can offer the acquiring party a more accurate valuation result based on the detailed information obtained. This valuation result not only serves as a conclusion on market value but can also provide a reference for investment value, which the acquiring party can use during negotiations with the other party.

    The second type of role is that of the domestic regulator. According to current domestic regulations, whether the merger or acquisition involves state-owned assets or listed companies, an assessment or valuation report must be issued by an independent third party—the appraisal agency.

    “For example, Jinjiang Shares is both a state-owned enterprise and a publicly listed company. Our assessment this time has also met the requirements of both state-owned asset supervision and listed-company regulation,” said Jiang Xiao.

    Upon completion of the acquisition and during the handover process, the appraiser should also assume the critical role of an asset inventory specialist. This is because once the acquisition is finalized, the company needs to carry out a handover based on the list of assets and information provided at the time of the merger and acquisition. During the appraisal phase, the appraiser can typically provide a comprehensive asset inventory list. This detailed inventory will play a crucial role during the company’s handover.

    “In the Jinjiang acquisition of the Louvre project, the information we obtained from our inventory of the Louvre Hotel’s key owned properties has been tremendously helpful to Jinjiang Shares,” he said.

    After the acquisition, the enterprise still needs to prepare consolidated financial statements. At this point, the appraiser also plays a crucial role and serves as the enterprise’s financial reporting specialist. Specifically, following the completion of a business merger under non-common control, the enterprise must include the acquired company’s assets and liabilities in the consolidated financial statements at fair value—this process is known as the allocation of the purchase consideration. PPA At this point, the appraiser should assess all assets and liabilities of the acquired company and provide fair values for use when the companies prepare their consolidated financial statements.