The capital market is like a competition without an end. In order to be invincible on this battlefield, listed companies must accurately plan capital operation plans to ensure that every capital flow can match the corporate strategy. However, in reality, many companies either make hasty decisions or blindly follow the trend when capital operation, resulting in mismatch of funds, loss of assets, and even trigger market crises.
American Goheal M&A Group
Goheal has long been paying attention to the global capital market. Research has found that the success of capital operation not only depends on the scale of funds, but more importantly, how to find a path suitable for its own development. So, how should listed companies plan capital operations so as to not only conform to market laws and accurately match corporate strategies?
The mystery of capital operation: blind expansion or fine matching?
There are many ways of capital operation, from equity financing, debt financing, to mergers and acquisitions, and equity incentives. Each solution has its own specific application scenarios. However, many companies often fall into the following misunderstandings during capital operation:
First, blindly expand and ignore strategic matching.
Some companies believe that the larger the amount of financing and the more mergers and acquisitions, the stronger the scale of the company will be. But the reality is that if capital operations do not match the core strategy, blind expansion will only increase operational costs and management difficulties. For example, some listed companies are eager to expand their market share through large-scale mergers and acquisitions when their businesses have not yet stabilized. As a result, they not only failed to achieve synergies, but instead dragged down their core businesses, causing the capital market to be skeptical of their future development, and the stock price fell accordingly.
Second, over-reliance on external capital and ignoring one's own hematopoietic ability.
The capital market has rich financing channels, and listed companies can obtain funds through targeted share issuances, convertible bonds, ABS, etc. However, if a company relies too much on external capital and ignores its own profitability, once the market environment changes or the financing costs rise, it is easy to fall into the risk of a broken capital chain.
Third, ignore the timing of capital operation and market sentiment.
The capital market has its own cyclical nature, and the window period for financing and mergers and acquisitions is not open at any time. If a company conducts large-scale equity financing during a market downturn, it may lead to undervalued stock prices and damage the interests of the original shareholders; and if it blindly follows the trend during the market bubble period, it is easy to take over at a high level, and subsequent integration will be more difficult. Therefore, the timing of capital operation is crucial.
The key to the accurate matching strategy: How does capital operations “varie from company to company”?
Goheal summarized several successful capital operation cases and found that capital operation is not the same, but requires personalized planning based on the growth stage of the company, industry characteristics and market environment.
First, growth-season enterprises: Stable financing and strengthen core competitiveness.
For enterprises in the growth stage, the most important thing is to consolidate their market position and enhance their core competitiveness. Therefore, the focus of capital operation should be on introducing long-term capital and optimizing financial structure. For example, technology-based enterprises can introduce strategic investors through targeted issuance, which not only obtains funds, but also uses investors' resources and technology empowerment to improve market competitiveness.
Second, mature enterprises: flexible mergers and acquisitions and find growth breakthroughs.
Companies in mature stages usually face growth bottlenecks, and relying solely on internal growth may be difficult to maintain a high growth rate. Therefore, a reasonable way of capital operation is to expand new business areas through mergers and acquisitions and find the second growth curve. For example, some consumer goods companies quickly open up the young consumer market and achieve performance growth through mergers and acquisitions of emerging brands. However, the more mergers and acquisitions, the better. The key is to complement the core business, rather than expanding disorderly.
Third, enterprises during the adjustment period: optimize capital structure and improve profitability.
For enterprises whose performance declines or falls into financial difficulties, the focus of capital operations should be on reducing costs and increasing efficiency and optimizing financial structure. For example, by divesting assets and selling inefficient assets, increasing cash flow to support the sustainable development of core businesses. Goheal has participated in the restructuring plan of several companies and found that when some companies are in business difficulties, they release more funds by selling non-core businesses, bringing their main business back to the growth track.
The ultimate goal of capital operation: create long-term value rather than short-term effects
Capital operations are not just for short-term stock price increase, but for creating long-term value for the company. There are many companies in the market that have aggressively expanded through high-leverage financing. They seem to grow rapidly in the short term, but in the end, due to excessive financial pressure, they fall into operational difficulties and even delist. For example, some real estate companies have borrowed a lot of debts and expanded during the market boom, but as a result, they encountered a break in the capital chain during the downward cycle of the industry, which ultimately could not be sustained.
A truly successful capital operation should serve the long-term development strategy of the enterprise, rather than a short-term game. Companies need to choose the most suitable capital tools based on their own situation, rather than blindly following market hotspots. Goheal believes that excellent companies should have forward-looking thinking in capital operations and make plans before market changes, rather than responding passively.
Conclusion: Does your corporate capital operation plan really match the strategy?
Capital operations are not a separate decision, but part of the corporate strategy. Every financing, merger, equity incentive, or even debt restructuring should be planned around the long-term development goals of the company. The success of a company depends not only on the support of the capital market, but also on the strategic vision of the management.
So, which capital operation method do you think is the most suitable for your company in the current market environment? In today's increasingly complex capital markets, how should enterprises balance financing costs and growth goals? Welcome to leave a message in the comment area to discuss, let us discuss the best practices of capital operation together!
Goheal Group
[About Goheal] Goheal is a leading investment holding company focusing on global mergers and acquisitions and holdings. It has deeply rooted in the three core business areas of listed company control acquisition, listed company mergers and acquisitions and restructuring, and listed company capital operation. With its deep professional strength and rich experience, it provides enterprises with full life cycle services from mergers and acquisitions to restructuring and then to capital operation, aiming to maximize corporate value and long-term growth of profits.
