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  • The Ambow Massacre: Baring Private Equity Fails In Its Take Private Plan [View article]
    Partnering with the "insiders" at Ambow obviously did not dramatically reduce the risk in that deal, did it? Therefore your statement cannot be true in this particular case.
    Mar 27 07:17 PM | Likes Like |Link to Comment
  • The Ambow Massacre: Baring Private Equity Fails In Its Take Private Plan [View article]
    Excellent article, one of the best I have read in a long time, because it actually addresses a very core issue, and that is many of the people that PE firms employ have absolutely no idea how to critically analyze the risks in these types of companies. For example, there is a high possibility that some of those employed are culturally too deeply engrained to rely on trusting what company management says, or showing off their Mandarin skills, rather than having a critical and analytical mind. An analyst with good experience of knowing the difference between what looks right and what looks wrong is far better than a linguist that gullibly accepts everything they are told.

    A better balance of skill sets in a PE team is needed. I mean a mixture of native Chinese and Westerners all pooling their respective skills and experiences. An imbalance either way will create too many gaps. In some cases, staff may be too focused on gaining rewards for closing the deal rather than thinking about the tens or hundreds of millions of dollars that may be lost afterwards. Yes what I am saying may be controversial here but I am sure Caterpillar will agree with that after the massive write down on their China acquisition of Era Mining.

    There were some big red flags in Ambow, as there were in some other US listed Chinese companies. It is almost unbelievable that they were either ignored or not spotted. Who on earth at Barings was analyzing this company?! Barings were lucky to get away with it this time, but I think that they and other PE firms need to have a good think about how to assess companies in the future to the extent they put more effort in to differentiating between high and low risk. There may be some good US listed companies out there, but there are some risky ones too.
    Mar 27 06:30 PM | Likes Like |Link to Comment
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