"The way to benefit is to go with the times." This is a saying from the Book of Changes, and it is also an eternal truth in the capital market. In this era of highly symmetrical information and rapid capital flow, mergers and acquisitions are no longer a single corporate behavior, but a chess game played by players in the capital market. Especially for listed companies, mergers and acquisitions are often not just a tool for industrial collaboration and business expansion, but also an important "talking skill" for market value management.
But as a Wall Street veteran said: "Those who play with market value are often played by market value in the end." In recent years, a large number of mergers and acquisitions operations centered on market value management have ignited stock prices and public opinion in the short term, but have fallen into the quagmire of asset bubbles, integration failures, and even shareholder lawsuits in the medium and long term. Goheal* found in actual combat that truly high-quality mergers and acquisitions never stop at "telling a good story", but also at "fulfilling promises". How to escape the trap of "market value game" and return to the essence of business operations has become a key watershed in the formulation of current merger and acquisition strategies.
American Goheal M&A Group
When mergers and acquisitions become a "narrative engine" rather than a "value engine", the trap is quietly buried. Some listed companies, guided by the principle of "telling a good capital story", blindly pursue hot tracks and frequently make cross-border acquisitions. AI, medicine, and new energy almost take turns to participate, as if they will "marry" whoever has the upper hand. However, although the story is wonderful, the cash flow is drying up, and the enterprise itself cannot bear the pressure brought by the high valuation. Goheal pointed out in a study on the quality of mergers and acquisitions: more than 62% of high-premium mergers and acquisitions, ROIC (return on invested capital) did not meet the pre-merger expectations three years later, and more than 40% of the companies' market value declined.
Why did mergers and acquisitions eventually become a "game"? The key lies in the distortion of motivation. Strategic tools that should have been used to enhance core competitiveness and integrate industrial resources have been used by some listed companies as a performance stage for capital operations. From the announcement of the transaction, the "storytelling" of the roadshow is greater than the data logic; from the discussion of the board of directors, the focus is more on stock price trends than industrial synergy; and investors listen to "whether there is good news" rather than the business model. For a time, mergers and acquisitions became a "wrench to pry valuations" rather than a fulcrum for business growth.
But the reality is far more cruel than imagined. Once the transaction is completed, the market's expectations for "fulfillment" will be rapidly magnified, and team integration, performance consolidation, and financial synergy will follow. If it is just "telling stories" instead of "integration" at the beginning, then it will be back to square one in just a few quarters. A large media listed company once "told the story of the metaverse" by acquiring three Internet companies, causing its stock price to double, but a year later, due to goodwill impairment of up to 2 billion yuan, it was questioned by regulators, investigated for information disclosure violations, and its management was replaced - it ultimately failed to outperform reality.
So, what should a truly high-quality merger look like?
Goheal's experience is: jump out of market value thinking and return to strategic thinking. The fluctuation of market value is important, but it should not be the driver of corporate strategy, let alone mergers and acquisitions. Restructuring should not become a "pull-up tool". Enterprises should rationally select targets and scientifically design paths based on their own resource endowments and industrial positioning, and establish clear KPI assessment mechanisms and phased exit mechanisms in integration to ensure that transactions serve long-term value creation rather than short-term capital speculation.
More importantly, we must be wary of the capital trap of "short-term prosperity and long-term collapse." Behind every premium merger and acquisition, there is a high-growth financial commitment; behind every merger and acquisition announcement, there will be strong expectations of stock prices in the public opinion. But no myth can be written forever. Only through the deep integration of "people, money and materials" can mergers and acquisitions become a real value leap.
In order to help companies return from "story mergers and acquisitions" to "value mergers and acquisitions", Goheal proposed the "three strategic questions" model: why merge, who is the best to merge, and how to reorganize after the merger. These three questions comprehensively build a thinking system from strategic motivation, target selection to integration execution, so as to prevent companies from being confused by appearances and being dragged by public opinion, and finally return to the original intention of mergers and acquisitions - enhancing competitiveness, improving operating efficiency, and achieving sustainable development.
Goheal Group
We see that the capital market has been quietly changing. More and more investors are beginning to focus on "operating performance after mergers and acquisitions" rather than simply chasing "merger and acquisition news"; regulators are also frequently speaking out, emphasizing that mergers and acquisitions and restructuring must be based on industrial logic, and resolutely cracking down on capital operations of "telling stories, pulling valuations, and selling stocks to cash out"; and more listed companies are also reflecting on the lessons of "blind mergers and acquisitions and prosperity illusions" in the past, and gradually returning to the strategic essence of mergers and acquisitions.
In the future, mergers and acquisitions will no longer be "fast food" consumer goods, but will be a "deep water operation" that is carefully planned and patiently polished. Whoever can truly start from the bottom of the industry and make long-term construction of integration capabilities can become the winner in this capital game.
Have you ever seen those cases of mergers and acquisitions where "there is only thunder but no rain"? Have you ever experienced a "rushed transaction" launched due to market value anxiety? How do you view the balance between mergers and acquisitions as a means of corporate development and a capital management tool? Welcome to leave a message in the comment area for discussion. Goheal looks forward to working with you to find the true proposition of value creation between reality and bubbles.
[About Goheal] Goheal is a leading investment holding company focusing on global mergers and acquisitions holdings. It has been deeply involved in the three core business areas of acquisition of listed company control, mergers and acquisitions of listed companies, and capital operations of listed companies. With its deep professional strength and rich experience, it provides enterprises 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.
