Wal-Mart Stores Inc.'s senior director of M&A, Luis Castellanos-Torres, spoke on the ins and outs of dealmaking at the Corporate Dealmaker Forum on Thursday.
With China attracting $84 billion in foreign investment, Castellanos-Torres said that having a strong presence in China is very important for Wal-Mart from an acquisitions prospective.
"We've learned a number of things," said Castellanos-Torres, who put building relationships at the top of his list. "In China it takes patience, focus and discipline."
"Selecting the right partner is going to be critical," he said. "What you find in China are long-term marriages, so you have to play the dating game. It's important to have people living there, on the ground, if you want to do deals. You must have deep relationships there. Deals in China are often sealed over the dinner table, not in a boardroom. There is a high premium put on legacy. Many businesses are family owned, and they want to know that the business is going to be nurtured."
Once you do have a partner, Castellanos-Torres puts a premium on being forthright about what your acquisition goals are and how you want to get there. "Relationships are extremely important, and in order to avoid being offensive, you need to fill your partner in on what you want. Corporate formalities are not there, but that doesn't mean the information [for due diligence] isn't there."
Additionally, "compliance with regulations at the federal and local levels is very important. As is real estate -- be sure you can track exactly who the real owners of a property are."
- George White
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