As McNulty explains, many Asian companies are looking to quickly and cost-effectively bring leading-edge industrial technologies to Asian markets where they already have a footprint, within industries and processes in which they already have expertise.

“They want to find new, advanced technologies they can pair up with their core legacy capabilities. That lets them tap into unmet demand for innovative new applications in their established markets,” he says. “U.S. and European companies with cutting-edge technologies are very attractive to these buyers, who often are prepared to pay well for quality assets that fit their strategies.” 

“There are many broad-based conglomerates in Asia, serving multiple end-markets, with cross-selling opportunities,” adds Logue. “By buying companies with established technologies, they can expand what they can offer more quickly than by developing something in-house.”

At the same time, an Asian buyer could use the purchase as a faster and less risky entrée into Western markets. By purchasing a company with an established footprint and relationships, they can more easily overcome some of the key challenges of global expansion.

But the motivation for buying isn’t always, or only, to enhance their product offerings or expand into new markets. Many Asian manufacturers are looking for new technologies that can help make their own operations more efficient and productive so they’re better positioned to deal with changing labor dynamics, workforce challenges, and intensifying pressure to remain competitive and grow globally. 

On top of all that is a more recent overarching driver of interest in acquisitions: the China-U.S. trade war. Tension and uncertainty in the U.S.-China relationship has sidelined some Chinese buyers, encouraging buyers from other Asian countries to enter the competition for U.S. companies.

To be sure, large Asian industrial companies can be a promising pool of potential buyers for Western companies with cutting-edge technology in these three areas. However, Asia is a complex and dynamic market that can be difficult to navigate. Working with potential Asian buyers can take much longer than working with U.S. buyers and requires some different approaches. Three key practices can help sellers successfully include Asian buyers in their exit strategies.

1. Understand the differences across Asian buyers. There is no one-size-fits-all strategy.

“The very term ‘Asia’ can be misleading,” notes Wang. “It suggests a single, broad, uniform region when, like any other part of the world, it’s highly diverse. There are a variety of economic profiles, ranging from stronger growth in China to slower growth in Japan, with Korea somewhere in the middle.”

Wang adds that cultural differences from country to country are substantial too, as are investment approaches and risk tolerance. Likewise, readiness to transact with U.S. and European businesses and the speed with which buyers are prepared to move can vary significantly from locale to locale, and from company to company.

As Logue explains, one particularly pronounced difference is the decision-making process. “In Japan and Korea,” he says, “decisions are very much consensus-based. There’s often no single defined decision maker, as is typically the case with Western companies, which makes it difficult to know exactly whom to go to for buy-in.”

Conversely, Chinese buyers may need to incorporate government mandates in their decisions, such as the One Belt-One Road program driving investment in certain kinds of infrastructure and transportation assets. For their part, buyers in Singapore tend to be the most Western in their approach, and generally move at a faster pace than other Asian buyers.

Wang points out that these generalizations apply to individual buyers to varying degrees. “The only way to truly understand Asian buyers—like any buyers—is to form relationships with them,” says Wang. “Perhaps the only real universal truth across Asia is the importance of those relationships, and the amount of time needed to build them.”

2. Create relationships far in advance of the sale.

That being said, there is no time like the present to start building those relationships. As McNulty says, having them in place can create new opportunities, especially given the often complex supply chains of large Asian conglomerates.

“A U.S. automation equipment company learned that a major Asian manufacturer was interested in buying it, which was interesting because the manufacturer didn’t fit the profile of a prospective buyer on paper,” he explains. “It turned out that a subsidiary was a customer, and the parent company was impressed enough to want to own it.”

As McNulty reiterates, that’s why it’s important that sellers establish relationships with prospective buyers far in advance of a sale, including making regular in-person visits to meet with the key players, and identifying bankers who can help keep the company’s name in front of them.

“You need to leverage your relationships sooner rather than later, because it could take significantly longer for Asian strategic buyers than U.S. or European ones to decide on an acquisition,” McNulty says. “It just takes time, and contact with prospective buyers has to be focused, intentional, and regular.”

3. Be prepared for a new range of concerns and considerations.

Business owners unused to working with Asian buyers may find that certain factors are more critical than they anticipated. For instance, some Asian companies are inherently cautious about doing business with non-Asian companies, says Wang: “They’re sometimes reluctant to make big bets for fear of betting wrong, choosing instead to pursue smaller deals, or even a partnership or minority investment, to dip their toe in the water.”

Likewise, an Asian buyer looking at a company outside of its established lines of business may be less likely to make a large investment at first, and seek a smaller first step. “A conglomerate that wants to be in energy storage systems but currently focuses on shipbuilding will probably make a small initial bet,” says Logue.

McNulty adds a third potential concern for some Asian buyers. “When it comes to management teams,” he says, “some Asian buyers will be concerned about attrition, cultural differences and the difficulty of managing a business that’s 10,000 miles away.”

Whatever the specific concerns that arise, sellers should plan on spending reciprocal time educating potential buyers and conveying the excitement around the opportunity. It will go a long way toward building relationships and making them comfortable.

They should also consider working with an advisor with experience with Asian buyers and an established footprint in the region, says Wang: “Just having someone on your team with relationships and cultural know-how can cut significant time from the process.”