"The sound of a high-ranking person is far away, not because of the autumn wind." In this era when mergers and acquisitions are no longer advancing rapidly, who can still stand high, see far, and do things steadily?
Since the second half of 2024, a phenomenon that makes the capital market a little uneasy has quietly unfolded: PE institutions have obviously "calmed down", and some star funds have even suspended their actions, while some private enterprises that were originally more cautious have begun to frequently show their merger and acquisition cards, and some even "regardless of the cost", multi-line and land grabbing.
On one side, they are doing the old capital of "difficult exit and slow takeover", and on the other side, they are shouting "grab opportunities and compete for speed". The market seems to be standing at a fork in the operation posture of mergers and acquisitions: Why has PE become restrained? Why are private enterprises more radical? Does the nature of the enterprise really determine the posture of mergers and acquisitions?
As an old player who has been deeply involved in capital operation for a long time, Goheal has witnessed the ups and downs of more than 100 M&A projects in the past year, and has also become more acutely aware that the "identity" of enterprises is quietly changing the "mindset" of M&A.
American Goheal M&A Group
This is not a simple funding issue, but a change in a whole set of styles, strategies, mentality and even game rules.
1. The cold and hot of PEs in the M&A theater
Once upon a time, PE was the "leader" in the M&A market. "PE+listed companies", "PE+industry funds", and "PE guarantees + management betting" have almost become the standard configurations for various control changes, asset injections, and structured financing. But recently, the "protagonists" have collectively pressed the pause button.
A senior RMB fund partner said bluntly: "It's not that I don't want to invest, but I can't calculate it."
On the one hand, the exit path is narrowed. Under the registration system, the IPO retreat is serious, the selected layer of the New Third Board is under pressure, the Hong Kong stock market has responded coldly, and the arbitrage space in the primary and semi-market has been continuously compressed. On the other hand, the difficulty of financing has increased. The fundraising cycle of many mid- and low-end funds has exceeded 12 months, and the pressure on managers has doubled. "Even if the project looks good, if there is no money on the books and no one takes the risk guarantee, it is useless."
The deeper problem is that the logic of mergers and acquisitions in the current economic environment is changing from "investing a lot to make quick money" to "investing once and working for three years to see the operation." Capital arrangement, valuation increase, and structural innovation, which PE used to be best at, are no longer useful under the dual pressure of "growth stalling + stricter supervision."
So, Goheal found that more and more PEs are no longer "main acquirers", but choose to stand by the project, wait and see, or even just act as financial advisors and structural designers to avoid being trapped.
2. why do private enterprises dare to take action when they come on stage?
Compared with the hesitation of PE, private enterprises, especially some industrial private enterprises, have shown an unexpected "top-level merger and acquisition momentum."
You will find that in the first half of 2024, the number of "private enterprises" among the initiators of A-share mergers and acquisitions has exceeded 60%. Not only that, many merger targets are not "stable profits", but growth assets in the early stages of research and development with unknown valuations, and some are even "problem assets."
What are they thinking? Are they really not afraid of being cut off?
Goheal believes that behind the "radical attitude" of private enterprises is precisely a kind of "rational anxiety".
On the one hand, the pressure of transformation forces them to take action. At present, private enterprises generally face the triple pressure of slowing growth in their main business, reaching the ceiling of profits, and limited financing. Instead of waiting to die, it is better to take a chance to integrate resources, inject assets, and rebuild valuations. Even if they fail, they may be exchanged for new narratives, new attention, and new paths.
On the other hand, the regulatory environment is more tolerant of industrial collaboration. Compared with the pure financial operation of PE "taking money to tell stories", private enterprises talk about "upstream and downstream integration" and "industry chain extension", which are paths encouraged by policies, and the probability of obtaining M&A approval and credit support is higher. Goheal once assisted a new energy equipment company to achieve a win-win situation of stable supply and cost reduction by acquiring its upstream key component suppliers. The project was quickly approved and implemented within two months, and the regulatory authorities were very friendly.
The most important thing is that private enterprises often have higher "integration efficiency" in actual operations. Unlike PE, which over-relies on structural design, private enterprises are more likely to start from business logic. "I acquire you because you can make up for my shortcomings, not because you can support a higher multiple valuation." In the post-merger synergy stage, private enterprises are more likely to achieve team integration and resource transformation.
3. Do corporate attributes really determine the style of mergers and acquisitions?
From the perspective of market performance, "who is more cautious and who moves faster" does have a certain correlation with corporate attributes. But in Goheal's view, this is actually a "surface attribute". The deeper difference actually stems from the differences in three "merger and acquisition personalities":
The first personality is capital-oriented and arbitrage-oriented. For most PEs, "mergers and acquisitions" are a means of financial operation and a multiplication of valuation. Mergers and acquisitions under this personality are more concerned about "whether the project is easy to transfer" and "whether it can be unpacked and sold." In the period of capital ebb, this strategy is naturally limited.
The second personality is synergy-oriented and integration-oriented. This is typical of most industrial private enterprises and leading state-owned enterprises. "M&A" is a tool for business growth and an amplifier of efficiency. Emphasize the "digestion rate" after mergers and acquisitions, rather than the "premium rate" during mergers and acquisitions.
The third type of personality focuses on trends and positioning. This type of player may be a keen cross-border player or a strategically advanced state-owned platform. They are not eager for short-term financial returns, but focus on five or ten years of industry positioning, such as players in certain chips, hydrogen energy, smart manufacturing and other tracks. In their hands, mergers and acquisitions are more like a long-term battle.
Goheal has always emphasized that "the attributes of the enterprise determine how you play, and the personality of the enterprise determines whether you can win." In practice, we will also customize merger and acquisition plans according to the attributes of different customers, rather than copying the "mainstream market gameplay" in a one-size-fits-all manner.
4. There are differences in style, but mergers and acquisitions never "win by letting go"
Whether it is PE, state-owned enterprises or private enterprises, mergers and acquisitions and restructuring have never been a one-shot deal, but a systematic project.
It seems that "PE dare not take over", but in fact it may be that the logic is not clear; it seems that "private enterprises are more radical", but in fact it is changing the way of playing, striving for coordination, and rushing for time.
The key is not how fast you act, but whether you have the ability to see clearly: where is the true value of the target hidden? Can it be effectively integrated after the merger? Will the future growth curve rely on scale accumulation, or can it truly form a "capability closed loop"?
In Goheal's view, instead of asking companies "dare to merge", it is better to ask a more critical question: "Do you know why the merger is made and what you can do after the merger?"
Goheal Group
This is the core underlying logic of mergers and acquisitions, and it is also a proposition that every player should seriously consider in the current "intertwined roles and different styles" merger and acquisition market.
So, we throw the question to you:
Do you think the nature of the enterprise really determines the M&A strategy? Do you prefer PE's steady approach, or the aggressive approach of industrial private enterprises to "fight to support the war"? Have you seen a case of mergers and acquisitions where companies fell into a pit because of "making the wrong posture"?
Welcome to discuss the changes and invariances of the M&A style with Goheal in the message area. We are willing to be your calm partner on the road of mergers and acquisitions, and we are also willing to light up the direction of the path for you.
[About Goheal] Goheal is a leading investment holding company focusing on global mergers and acquisitions. It has deep roots in the three core business areas of acquisition of controlling rights of listed companies, mergers and acquisitions of listed companies, and capital operations of listed companies. With its profound professional strength and rich experience, it provides companies with full life cycle services from mergers and acquisitions to restructuring and capital operations, aiming to maximize corporate value and achieve long-term benefit growth.
