The situation
A US industrial coatings group had operated a 50/50 Guangzhou joint venture with a local distributor for over a decade. The relationship had soured: the partner's appointed general manager controlled the company chop, business licence and bank keys, blocked board approval of the annual budget and a needed capacity investment, and — the client suspected — was steering orders to an affiliate. The JV contract's deadlock clause required only "friendly consultation". The business itself remained sound, with customers the client could not afford to abandon, so walking away was not an option. The client wanted the partner out.
What we did
- Established the facts quietly. Before signaling anything, we exercised the client's statutory shareholder information rights to obtain financial records, and commissioned an investigation into the affiliate's dealings, documenting related-party sales at suppressed prices.
- Built the legal leverage. Chinese company law allows a shareholder to petition for judicial dissolution where management is deadlocked and the company's operations face serious difficulty. Two consecutive years of blocked board resolutions gave us a credible filing — credible enough that the partner's counsel understood the company could be wound up under court supervision, destroying the distribution business the partner valued.
- Negotiated the buyout. We presented dissolution as the default path and a buyout as the off-ramp. Valuation went to a jointly appointed appraisal firm, with the related-party sales evidence used to adjust the partner's earnings claims downward.
- Closed against deliverables. Payment was structured in escrow-like staged tranches released against SAMR change registration, physical handover of the chops, licences and bank keys, and the general manager's documented exit.
The result
The buyout signed and closed in seven months from engagement. The client acquired the partner's 50% at appraised value — roughly 18% below the partner's opening demand — converted the JV into a WFOE, and retained every major customer through the transition. No litigation was ever filed; the dissolution petition stayed in the drawer, which is where it did its best work.
Results depend on the specific facts of each matter; past outcomes do not guarantee similar results.