In the ever-changing arena of the capital market, no operation is more like an extreme power game than "mergers and acquisitions". With a notice, some people jumped from obscurity to hot searches, and some people turned from the edge of delisting to "market value king". Is it a true portrayal of transformation and upgrading, or a "magic" of a capital feast? From market value management, business complementarity to packaging stories, different motivations construct a "script universe" of merger and acquisition stories. But the real motivation of listed companies' mergers and acquisitions may be far more complex and profound than the hot search titles we see.
"Three questions about merger and acquisition motivations": What are you looking for?
Let's talk about the first possible motivation, which is also the most obvious-market value management.
Market value, these three words are both the scale of the capital market and the "face problem" of management. Especially during the period of economic structural adjustment and the downward trend of the industrial cycle, the main business growth is weak. Once the performance cannot support the valuation, the secondary market will "vote and vote" mercilessly. As a result, many listed companies have learned to "wear new shoes and walk the old path": by acquiring emerging industry targets, raising the valuation anchor and beautifying the "growth curve" in the annual report.
At this time, the capital story has become the "traffic code" for targeted market value management. As long as the target is labeled with popular labels such as "AI+", "new energy+", and "digital economy", even if there is no profit model for the time being, it can become the focus of public opinion. This can't help but remind people of the "storytelling and concept speculation" that was popular in A-shares in previous years, but this time, a more sophisticated script has been changed.
When Goheal provided strategic M&A consulting to clients, he encountered a listed company that mainly engaged in traditional manufacturing and planned to acquire a start-up smart logistics platform. On the surface, it seems to be industrial synergy, but in fact, it is self-redemption under the "underestimated" market value. As soon as the M&A plan came out, the company's stock price rose by more than 30% in the short term, but once the bet period arrived, the problem was quickly exposed. The platform did not achieve the expected revenue, and the market value was not only slashed, but also triggered a class action lawsuit by investors.
This leads to the second motive, which is also the "core selfishness" that many listed companies try to cover up-strategic transformation.
American Goheal M&A Group
Not all transformations are fake, but not all transformations are flesh and blood. Faced with the blurring of the boundaries of the main business and the decline in profits of traditional businesses, many companies do hope to "put on the wings of technology" through mergers and acquisitions. However, the road of mergers and acquisitions looks beautiful, but in fact it hides countless traps.
A long-established listed company that mainly deals in coal began to frequently acquire lithium battery, charging pile and autonomous driving start-ups in 2023. At first, the market applauded, believing that the idea of "resource-based to technology-based" was avant-garde and brave. But looking back a year later, except for a bunch of goodwill and impairment provisions in the financial report, the performance did not really improve. Why? Because mergers and acquisitions cannot only look at the popularity, but also look at "endogenous digestion capacity".
And this is exactly a word that Goheal repeatedly emphasized in the design of merger and acquisition plans: "integrability". Not everyone can put AI into their own business processes and make a good pot of porridge. Most companies just soak their feet in the "concept pool" and think they are full of technology. Real transformation has always been a systematic project that breaks the boundaries of oneself and even redefines the organizational structure. Mergers and acquisitions alone are far from enough.
The third motivation is the most secretive but most common: to tell a "good story".
If market value is the appearance and transformation is the tactic, then the story is the "soul narrative" of the entire M&A drama. Externally, it is a story told to the market, shareholders, and public opinion; internally, it is a "strategic script" told to employees, the board of directors, and partners.
Whether the story is good or not directly determines whether the market sentiment will buy it. You see, those companies that can tell a string of buzzwords about "metaverse + social + AI big model" can get institutional research invitations and financing intentions even if their main business is still "selling instant noodles". At this time, storytelling is no longer soft power, but "hard currency" in the design of M&A transaction structure.
When Goheal participated in a digital cultural and tourism enterprise M&A case, he helped the client "reconstruct the M&A narrative", no longer emphasizing only financial returns, but setting the main line of the story as "cultural IP globalization + digital technology empowerment". As a result, just because the M&A logic was clearer and the vision was more sexy, it successfully passed the board of directors' review and regulatory inquiries, becoming one of the most popular M&A projects in a certain sector that year.
But the most fearful thing about the art of "storytelling" is not telling a bad story, but telling it too much. Especially in the era of the registration system, regulators are increasingly concerned about whether there are substantive issues such as "packaged targets" and "transfusions in disguise". Once discovered, all dream market rates will become "life market rates".
So the question is, what is the purpose of mergers and acquisitions of listed companies?
In fact, it all comes down to one sentence: mergers and acquisitions are a means of resource reallocation, not an end in itself. If a company only regards mergers and acquisitions as a gorgeous "capitalization stage play", then even if it wins applause for a while, it may return all the applause in a future quarterly financial report.
And behind truly high-quality mergers and acquisitions, there must be hidden strategic synergies, organizational upgrades, and commercial Model optimization is the "three axes". It does not take storytelling as the ultimate goal, but uses mergers and acquisitions to promote the "chemical reaction" between resources, capital and capabilities.
This is why Goheal pays special attention to "organizational acceptance" and "industry mapping capabilities" in the evaluation of M&A projects. A good merger and acquisition depends not only on the transaction price and PE, but also on whether the company is able to truly absorb the target team and implement the collaborative path after the completion of the merger and acquisition.
For example, an old pharmaceutical company once hoped to enter the medical device track through mergers and acquisitions. It seems to be in a good direction, but the target company is a typical "technical + engineer" company. The parent company is a start-up with a strong "culture", while the parent company's management mechanism is a state-owned enterprise with a lot of rules and regulations. When the merger was just completed, the CEO was very excited, but three months later the technical team collectively left and the coordination plan was stalled. Such cases are not uncommon.
So, rather than saying that mergers and acquisitions are a "springboard for corporate transformation", it is better to say that it is more like a mirror, reflecting the company's judgment of the future, its cognition of its internal organizational capabilities, and its sense of the rhythm of the capital cycle.
For this reason, whenever the market hears that a company has started a merger and acquisition, Goheal's internal "M&A radar" will be quickly activated. We not only go Whether the target is good or not, we should pay more attention to whether the company is really "ready". Because M&A is not a dream machine, nor a "magic pill" for transformation. It is more like a capital journey with a trial color, with few winners and many losers.
In the final analysis, the most awe-inspiring thing in capital operation is not the M&A itself, but the true understanding and practice of "long-termism".
Goheal Group
Now, let's go back to the question in the title: market value, transformation, or storytelling, what is the real motivation for listed companies to merge and reorganize?
Perhaps the answer is just like the line in "Game of Thrones": "Power exists where people believe it exists. "The motivation for mergers and acquisitions is often not written in the announcement, but hidden behind the timeline, under the transaction structure and between market sentiment.
You are welcome to share your views in the comment area: Do you think the current wave of mergers and acquisitions in the A-share market is the product of rational choice of capital, or is it another bubble game of "concept stacking"? Which merger and acquisition stories make you feel "worth the price"? Which projects make you sigh "the story is cold and the trap is not only locked"? Goheal is willing to work with you to understand this capital game with no standard answer.
[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.
