Episode 120 · 2022-02-03 · 43:06 · Original in Finnish
Negotiating M&A with Chinese Buyers | Kai Seikku | Negotiator 120
Originally published as “Kiinalaiset yrityskauppaneuvottelut | Kai Seikku | Neuvottelija 120”
Okmetic's chief executive Kai Seikku runs a Finnish silicon wafer maker owned by the Shanghai-listed NSIG, and serves as deputy chief executive of the owner as well. The episode opens up what surprised an investment banker: why the Chinese buyer did not replace management but treated it as an asset rather than a cost line, and why plans to move the plant to China were buried. Seikku also explains how the global component shortage began with the car industry slamming on the brakes in spring 2020, and why building new capacity takes years. The sharpest section is on Chinese negotiating culture: a letter of intent is not a deal, a non-disclosure agreement spreads information more effectively than anything else, the real decision-maker does not sit in the middle of the table, and a ganbei contest can only be won with a Finnish counter-move.
Core theses
- The buyer kept the management team because it valued it as the asset it had bought, which is the opposite of the synergy-driven assumption most advisers bring.
- A letter of intent carries much less weight than a Western counterpart expects, so momentum has to be built from something other than the document.
- The person in the middle of the table is not deciding, and reading the room wrongly on this point costs more than any term in the contract.
- The component shortage started with car makers cancelling orders in spring 2020, and capacity cannot answer within the cycle because fabs take years.
Watch and listen
Summary
Okmetic’s chief executive Kai Seikku runs a Finnish silicon wafer maker owned by the Shanghai-listed NSIG, and serves as deputy chief executive of the owner as well. The episode opens up what surprised an investment banker: why the Chinese buyer did not replace management but treated it as an asset rather than a cost line, and why plans to move the plant to China were buried. Seikku also explains how the global component shortage began with the car industry slamming on the brakes in spring 2020, and why building new capacity takes years. The sharpest section is on Chinese negotiating culture: a letter of intent is not a deal, a non-disclosure agreement spreads information more effectively than anything else, the real decision-maker does not sit in the middle of the table, and a ganbei contest can only be won with a Finnish counter-move.
The management was the asset
The expectation an adviser brings to a cross-border acquisition is that the buyer will replace the leadership and take out the cost. NSIG did neither, because what it had paid for was capability rather than capacity — and the plan to move the plant to China was dropped for the same reason.
A letter of intent is not momentum
Seikku’s most practical warning: the document a Western team treats as the point of no return is read very differently on the other side. Everything that follows has to be built on something else, and mistaking the signature for commitment is the standard error.
Who is actually deciding
The person seated centrally is often not the decision-maker, and a team that addresses its case to the wrong chair will have a pleasant meeting and no outcome. This is cheap to get right and expensive to get wrong, which makes it the highest-value paragraph in the episode.
Watch
The recording lives on the Neuvottelija channel: Kiinalaiset yrityskauppaneuvottelut | Kai Seikku | Neuvottelija 120. A Finnish edition of this episode is published at www.neuvottelija.fi.
In depth
The Neuvottelija AI editions carry a long-form write-up of this episode: English · suomeksi.
Go deeper
Explore the ideas in depth
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People and topics
Guests: Kai Seikku
Topics: M&A & Exits Negotiation Geopolitics