Aiying's experience suggests that before formally initiating due diligence, buyers must conduct a quick but accurate strategic assessment based on limited information. We recommend that clients consider the following aspects:

1. Strategic fit and license selection: We first conduct an in-depth discussion with our clients about their business plans. For example, for a tech company planning to issue innovative financial products (such as STOs), obtaining a Type 1 license (Securities Trading) is essential. For companies involved in managing alternative investment funds (such as digital asset funds), obtaining a Type 9 license (Asset Management) is essential. Aiying has found in practice that many clients have unclear goals at the outset. Our job is to help them accurately define their goals, avoiding the potential for delays in future business development or high maintenance costs due to the wrong license selection.
2. Market valuation and "strategic premium" analysis: We analyze the fair market value of the target license for our clients. A "clean" shell price is fundamental, but Aiying focuses more on its potential "strategic premium." For example, a Type 9 licensed company with a strong compliance record and internal systems that are easily integrated with technology can be valued significantly above the market average for buyers looking to quickly establish alternative investment or fintech businesses in Hong Kong.
3. "Penetrating review" of the buyer's background: We remind clients that the SFC not only scrutinizes the target company but also conducts a thorough review of the buyer, all the way back to the ultimate beneficiary. For buyers with deep backgrounds in technology or emerging industries, Aiying's unique advantage lies in helping them clearly present their innovative business models and technical architectures (such as those involving blockchain technology) to the SFC in a language consistent with regulatory logic, thereby allaying regulators' concerns about their funding sources and operational capabilities.

Aiying We recommend that customers start preparing in the following areas:

• Create a "compliant and transparent" brand image: We guide clients in compiling all correspondence with the SFC, compliance self-assessment reports, and proof of effectiveness of their anti-money laundering systems to create a comprehensive "Compliance Health Report." This report is the cornerstone for earning the trust of high-quality buyers, especially institutional buyers.
• Stabilize the core team and provide a "soft landing" solution: According to Aiying's experience, a seller really likes an RO team that is willing to stay for 6-12 months.
• Clearing financial and legal minefields: We will assist clients in reviewing and clearing all potential contingent liabilities, such as outstanding payments between shareholders and the company, unclear guarantees, etc. A company with clean accounts and simple legal relationships is very attractive to buyers.

Aiying focuses on the following "demerits":

• Historical compliance stains: We will assist clients in preparing detailed rectification reports and explanations for any historical compliance issues, turning reactive approaches into proactive ones.
• RO "name" problem: In practice, we have found that the SFC is extremely concerned about whether the RO is substantially involved in management. We advise clients to ensure that the RO's performance record is complete and authentic before selling to avoid doubts during the approval process.
• Gray areas related to emerging businesses: If the company has been involved in any consulting or transaction related to fintech or digital assets, even in gray areas, we strongly recommend that clients proactively and clearly disclose and prepare contingency plans to respond to regulatory inquiries under Aiying's guidance.

In transactions handled by Aiying, the MOU is the turning point from a loose intention to a serious transaction. We view it as a key risk management tool, especially when it comes to paying the earnest money.

When we negotiate MOUs for our clients, we focus on the following core terms:

1. Exclusivity: To protect the interests of both buyers and sellers, an exclusive period (usually 30-60 days) is established to ensure that the due diligence resources invested during this period will not be wasted due to the seller "marrying one woman into multiple relationships".
2. Earnest money/Initial deposit (Initial Deposit): This is the crux of the negotiation. Aiying's standard practice is to recommend that the earnest money (usually 10-30% of the transaction price) be deposited into an escrow account held by a law firm that is trusted by both parties.
3. Earnest money refund terms: This is the lifeline to protect the buyer. Normally, it will be clearly stated in the MOU: "If the due diligence results show that any buyerUnilateral dissatisfactionIf the Buyer discovers any undisclosed material matters (including but not limited to risks related to emerging businesses or technologies), or if the Buyer fails to comply with the legal, compliance, financial or operational conditions of the Buyer, the Buyer shall have the right to terminate the MOU and request a full interest-free refund of the Earnest Money.
4. Scope of due diligence and degree of cooperation: Normally, the MOU will clearly state that the seller is obliged to provide complete, true and timely information and cooperate with the Aiying team's interviews and system reviews.

Aiying's experience shows that submitting an application to the SFC is just the beginning of a long journey. The SFC's approval process is a "black box" filled with uncertainty, and our value lies in using our expertise and experience to illuminate this "black box."

1. "Storytelling" presentation of application materials: What we submit isn't a pile of forms, but a compelling business story. Aiying assists clients, especially those with a tech background, in translating their business models, funding sources (such as those involving complex equity incentives, overseas financing, or digital asset returns), and technical architecture into compliant language that the SFC can understand and accept. We proactively explain potential risks and provide comprehensive risk management solutions.
2. Interpretation of the “hidden meaning” of SFC approval:
   • "Fit and Proper" Qualifications of New Shareholders: The SFC values ​​not only financial strength and industry experience, but also integrity and reputation. Aiying will conduct a preliminary background check on new shareholders, identifying any factors that may cause concern to the SFC and preparing an explanation in advance.
   • "Dig Deep" into the Source of Funds: We guide clients in preparing an impeccable roadmap of their funding sources, with clear documentation at every stage, from the initial funding to the final investment. For funds originating from emerging sectors like digital assets, we assist in providing on-chain transaction records, proof of compliant exchanges, and professional tax advice.
   • “Stress testing” of the business plan: Aiying works with clients to refine their business plans, ensuring they demonstrate sound commercial logic, realistic profit projections, and are fully aligned with the activities authorized by their licenses. In particular, we avoid any language that could appear to the SFC to be purely regulatory or circumventing regulations.
3. Professional strategies for dealing with "supplementary documents": Receiving a list of questions from the SFC is a normal process. Aiying's experience lies in accurately assessing the genuine concerns underlying each question. Our responses go beyond simple answers; they provide an opportunity to further elaborate on our clients' strengths and commitment to compliance, addressing regulatory concerns and maintaining the initiative in the communication process.

A standard SPA template is far from sufficient to address the complex risks of financial license transactions.

 Identified high-risk minefields:

• The “Original Sin” of Compliance History: For example, if a company has historically provided a platform for unlicensed collective investment schemes or has long-standing systemic weaknesses in its AML/KYC processes, the SFC may still hold the new shareholders accountable for their management even if these issues are discovered after the transaction is completed.
• “Legacy risks” of emerging businesses: The company or its former shareholders or employees may have participated in certain financial innovation activities that were later determined to be non-compliant (such as trading certain tokens defined as "securities"), or had business dealings with high-risk counterparties.
• Data Privacy and Cybersecurity Vulnerabilities: The target company's IT system may have backdoors or security vulnerabilities, leading to customer data leakage, huge fines and reputational crises.