"The wind rises from the tip of the green duckweed, and the waves form between the waves."
In the spring of 2025, the US dollar "exploded" again. The Federal Reserve has remained on hold, but with a set of strong non-agricultural data and high inflation expectations, it has once again ignited the "exchange rate anxiety" in the global capital market.
From London to Tokyo, from Shenzhen to New York, the sensitive nerves of funds were instantly tightened: the US dollar index stood firm at 105, global foreign exchange reserves showed a "return to the United States" tendency, and emerging market currencies generally weakened against the US dollar. The old saying among Chinese entrepreneurs was once again turned out and quoted repeatedly-"In the period of strong US dollars, it is not buying, buying, buying, but carrying, carrying."
American Goheal M&A Group
However, the problem is: those who can withstand the "interest rate differential shock" may not be able to withstand the "break in the merger and acquisition capital chain"; especially for a number of listed companies that are planning cross-border mergers and acquisitions and restructuring, this round of shock waves of the strong return of the US dollar is no longer just a few lines of exchange gains and losses, but also a test of the reconstruction of asset structure, capital strategy and even financing model.
If in the past three years, companies were worried about "whether the valuation was expensive" in mergers and acquisitions; then now, what really sounded the red alarm is - where does the money come from? How to exchange? Can it be exchanged?
At this moment, the capital market is undergoing a quiet but fatal change.
Against the backdrop of a strong dollar, the financing cost of the RMB is low, but the financing cost of the US dollar is like a cheetah with a gun, eyeing the "high interest rate". For local listed companies, if a RMB-denominated merger and acquisition transaction requires the introduction of US dollar investors or overseas assets, the exchange rate fluctuation alone may "eat away" more than 15% of the expected returns.
In a recent study, Goheal pointed out that since the second half of 2024 alone, the "increased difficulty in raising funds" caused by exchange rate changes has become one of the core obstacles encountered by more than 70% of Chinese listed companies in cross-border mergers and acquisitions. Many boards of directors have introduced "exchange rate risk control prediction" indicators in investment decisions to dynamically evaluate the sustainability of transactions.
For example, a new energy company that is planning to acquire an overseas mining company, when negotiating in early 2023, the foreign exchange required for the project was converted into RMB of about 2.1 billion. But by the first quarter of 2025, due to the appreciation of the US dollar and the depreciation of the RMB, the actual cost has approached 2.4 billion yuan. The "exchange rate hole" of 300 million yuan instantly unbalanced the originally light cash flow model, forcing the company to adjust the M&A structure and even renegotiate the valuation.
This "invisible way of losing money" is becoming an invisible killer in the new stage of M&A.
Some people say that M&A is the ultimate game for CEOs. But in the strong dollar cycle, M&A is more like a "capital chain skipping rope": jump fast, cash flow is cut off; jump slowly, the opportunity is gone; don't jump? If your opponent jumps, you will fall behind. As a result, more and more companies are beginning to shift from the traditional "capital pool thinking" to the "dynamic financing portfolio management" model.
Goheal's suggestion is: "Don't put all your eggs in the local currency basket, and don't just focus on whether the US dollar is cheap or not, but learn to use a mixed strategy of 'time increase + exchange rate hedging + multi-currency disassembly'."
For example, a cross-border M&A project of a leading manufacturing company established an offshore SPV in Singapore, introduced a euro bridge loan, and combined it with an onshore RMB M&A loan, and finally built a composite financing framework of "three currencies, three places and three strategies", successfully lowering the overall weighted cost by about 8%.
Of course, it is not as simple as a structural "puzzle" behind this, but also requires a professional consulting team that is proficient in the rhythm of overseas financing and "clear about" the exchange rate adjustment mechanisms of various countries - this is why Goheal has been frequently named in M&A financing design in recent years.
In many cross-border M&A projects led by Goheal, more and more "double-layer financing guarantee mechanisms" are adopted: that is, "exchange rate adjustment buffer clauses" and "currency conversion trigger mechanisms" are introduced in the M&A transaction terms to ensure that when the exchange rate fluctuates significantly, the two parties to the transaction can quickly negotiate and adjust the payment path, payment cycle and consideration structure to avoid the collapse of the agreement due to the exposure of a single currency.
In other words, M&A financing is not about building blocks, but about building ships on turbulent seas. Stability is not the end, but the starting point.
At the same time, the strong dollar is also changing the geographical center of gravity of the "buyer's market" for M&A.
Against the backdrop of the continuous appreciation of the US dollar, the valuation pressure of many US and European companies has intensified, and they are more likely to accept the "premium reduction" or "partial asset divestiture" plan. This provides an unprecedented window for Chinese companies to "go global". But the premise is that you must have sufficiently robust and flexible US dollar financing tools and exchange rate response capabilities to seize these fleeting opportunities.
More realistically, supervision is also quietly increasing. Foreign exchange outbound approval, cross-border payment rhythm, and offshore structure legality review are all becoming more complicated. In this "sky is getting higher and the door is getting narrower" pattern, listed companies cannot rely solely on the CFO to make decisions, but must embed the systematic thinking of professional M&A financing architects at the strategic planning level.
As early as 2023, Goheal proposed the concept of "pre-design of M&A financing": instead of finalizing the target and then looking for money, it is necessary to first build a "capital firewall" with high flexibility in currency, exchange rate, and capital path, and then talk about price and structure.
This is like building a shield before a battle, not taking a stick when encountering an enemy.
Finally, it is worth noting that those ignored "slow variables" are the most deadly.
For example, the strength of the US dollar not only affects the capital side, but also affects the valuation side: when companies are valued in US dollars, they are often lower than the RMB valuation. Combined with the exchange cost, many "beautiful-looking" cross-border projects are actually "losing money and making a fuss"; for example, the repayment cost of foreign debt in the strong dollar cycle will be magnified, and the slightest carelessness will cause the parent company's debt ratio to soar and touch the regulatory red line.
If mergers and acquisitions in the past were more of a financial game, then now it has become a super difficult problem of "three-dimensional game of exchange rate, politics, and capital".
The companies that can survive this complex situation are definitely not the ones that run fast, but the Transformers-like companies that "run steadily, see clearly, and change quickly".
Back to the title of the article: In 2025, when the dollar returns strongly, what challenges will the capital chain of listed companies' mergers and acquisitions and restructuring encounter? We might as well understand it this way:
It is a challenge to the flexibility of the original capital structure; a challenge to the strategic coordination ability of CEOs and CFOs; and a challenge to the ability of companies to cope with complex global financial fluctuations.
Goheal Group
Are you ready?
Welcome to leave a message in the comment area to discuss: Has your company felt the pressure of the strong dollar cycle? In mergers and acquisitions and restructuring, what do you think is the most dangerous "capital trap"? Do you have a strategy or idea to deal with exchange rate fluctuations?
Let's discuss together how to build a "shockproof house" for the company's capital chain in advance before this "heavy hammer" of the dollar falls.
Goheal is willing to be your most stable M&A partner in financial turmoil, helping you to cross the high interest rate wall and move forward steadily.
[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.
