Recently, the China Securities Regulatory Commission (CSRC) issued the "Opinions on Strengthening the Supervision of Listed Companies (Trial)". Among these, in promoting listed companies to strengthen market value management and enhance investment value, it supports listed companies in enhancing their investment value through mergers and acquisitions. Multiple measures have been taken to activate the mergers and acquisitions market, encouraging listed companies to comprehensively use tools such as shares, cash, and targeted convertible bonds to carry out mergers and acquisitions and inject high-quality assets. Data shows that in the first quarterAM&A and restructuring activities in the stock market are active.
In the practice of mergers and acquisitions, what is the key to successfully enhancing a company's investment value through restructuring? Since last year, regulators have frequently encouraged and supported listed companies to engage in mergers and acquisitions. What changes are expected to occur in the market for mergers and acquisitions? How effective have the current measures such as targeted convertible bonds and small-scale rapid transactions been? How should future supervision be strengthened? What new trends and characteristics will emerge in high-quality industrial mergers and acquisitions in the future? How should relevant listed companies seize these opportunities?
Frost & SullivanFrost & SullivanZhou Mingzi, Executive Director of Frost & Sullivan Greater China, was interviewed by Securities Daily to discuss the above topics.
Securities Daily
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Q: In the practice of mergers and acquisitions, what is the key to successfully enhancing a company's investment value through restructuring?
In M&A practice, clarifying the acquisition target is one of the keys to enhancing a company's investment value. Before conducting an acquisition, the company needs to define its strategic objectives and desired outcomes to guide subsequent decision-making and actions. The purposes of a company's M&A restructuring include expanding market share, entering new markets, acquiring key technologies or intellectual property, etc. After establishing clear acquisition targets in the early stages, the company can better screen potential acquisition candidates, ensuring that the chosen targets align with the company's long-term strategy and vision, thereby increasing the probability of success and return on investment in M&A.
In addition, ensuring cultural consistency between merging companies is also one of the key factors for successful mergers and acquisitions. Cultures of different companies may vary, and if cultural differences are ignored during the merger process, it can lead to issues such as employee discomfort and team conflicts, thereby affecting the success of the merger. Therefore, after a merger, the acquirer needs to conduct a cultural assessment to understand the target company's culture, values, and work methods, and develop corresponding cultural integration plans. Through active cultural integration, it can promote employee integration and teamwork, helping to achieve business integration and value creation after the merger.
Q: Since last year, the regulatory authorities have frequently encouraged and supported listed companies' mergers and acquisitions. What changes are expected to occur in the M&A market as a result? How has the implementation of targeted convertible bonds and small-scale rapid transactions been progressing? How should future supervision be strengthened?
In the past two years, regulatory authorities have frequently sent positive signals to the market regarding mergers and acquisitions, introducing a number of measures including targeted convertible bonds and small-value quick approvals, aiming to simplify the review process, reduce transaction costs of mergers and acquisitions, and stimulate market vitality. Data shows that since the beginning of this year, there have been approximately60homeAThe number of listed companies disclosing major restructuring events has shown a significant upward trend compared to the same period last year, mainly involving high-end manufacturing industries. Overall, the regulatory authorities' series of merger and restructuring policies have achieved positive results, further highlighting the function of mergers and reorganizations in serving the real economy. Enterprises have grown and strengthened through mergers and reorganizations, enhancing their competitiveness.
In the future, to stimulate the vitality of market mergers and reorganizations, regulatory authorities will continue to make efforts to further provide a favorable environment for listed companies' restructuring. Firstly, regulatory authorities can further simplify the review process for mergers and reorganizations, reduce approval procedures and document requirements, and improve approval efficiency.,For example, optimizing the 'small and quick' review mechanism for reorganizations, etc. This will reduce the transaction costs of enterprises and encourage more companies to participate in mergers and acquisitions. Secondly, regulatory authorities can introduce policies to support chain leaders in integrating upstream and downstream industries, and formulate differentiated policies for different industries and enterprise sizes to better promote the integration and upgrading of industrial resources and drive the development of the entire industry. While streamlining processes, regulatory authorities must also strengthen risk management to ensure that the mergers and acquisitions of enterprises comply with laws and regulations and avoid adverse consequences. By simplifying review processes, supporting industrial chain integration, and strengthening risk management, regulatory authorities can provide stronger support for the release of market vitality.
Q: What new trends and characteristics will emerge from high-quality industrial mergers and acquisitions in the future? How should relevant listed companies seize these opportunities?
In the future, high-quality industrial mergers and acquisitions will exhibit several new trends and characteristics. At the same time, listed companies related to these industries also need to develop corresponding countermeasures in response to these trends.
Firstly, strategic emerging tracks that align with national policy orientations will become the focus of mergers and acquisitions. With policy support, strategic emerging industries are entering a golden development period. The demand for technological integration and scale expansion among enterprises is increasing day by day. Therefore, encouraged by policies, strategic emerging tracks will become the mainstream trend of mergers and acquisitions in the future. Listed companies should closely follow national policy orientations, seize opportunities in strategic emerging tracks, actively participate in related mergers and acquisitions activities, and enhance their competitiveness in emerging fields.
Secondly, the efficiency of mergers and reorganizations will be further enhanced. With the introduction of new policies, there will be a significant reduction in the number of inquiry rounds for eligible restructuring applications, leading to improved review efficiency. Therefore, listed companies need to promptly understand and adapt to the new review mechanism, making preparations in advance to complete mergers and reorganizations more quickly.
In addition, future mergers and acquisitions will place more emphasis on the synergistic effects of enterprises and the complementarity of industrial resources. Compared with past speculation and mere scale expansion, future mergers will focus more on how to integrate resources and enhance the core competitiveness of enterprises. Therefore, when conducting mergers and acquisitions, listed companies should pay attention to the connection degree and synergistic effects of their target enterprises with their own industrial chains, so as to achieve complementary advantages and create greater value.
Overall, in the future, high-quality industrial mergers and acquisitions will pay more attention to national policy guidance, approval efficiency, and corporate synergy effects. Listed companies need to closely monitor market trends, seize opportunities, rationally utilize merger and reorganization tools, and implement mergers and integrations to enhance their competitiveness and market position.
*This interview has been published in 'Securities Daily', with reporters Xie Ruolin and Mao Yirong. The original title was 'First QuarterAM&A and restructuring in the stock market are active Industrial M&A is Becoming the Mainstream
