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21st Century Economic reporter Cui Wenjing reporting from Beijing
Just 10 days after the release of the new "National Nine articles" and supporting policies and systems, new changes have begun to take place in the M & A market.
A person in charge of the M & A business of brokerage investment banks told the 21st Century Economic report that after the release of the new rules on M & An on April 12, a number of relevant responsible persons of small-cap stocks have come to consult on M & An issues, and it can be felt from the tone that the demand for premium has dropped significantly and is no longer "for sale". Before the introduction of the new rules, investment banks went to find real controllers of small-cap stocks, who "had the intention to sell, but when talking about prices, they raised their tails to the sky."
The head of the M & A business expects the "An eat A" business to usher in the spring this year.
According to a number of investment bankers, the activity of the M & A market has increased significantly since the Spring Festival. However, an increase in market activity does not equate to an increase in trading volume. This is related to the fact that the current M & An is mainly industrial M & A, which is often difficult, long cycle and low transaction rate.
According to Wind data, only 15 major M & A projects have been completed since the beginning of the year, the lowest in nearly a decade, which is a far cry from the more than 50 M & A projects completed in the same period from 2015 to 2019 when the M & A market was hot.
However, interviewees generally believe that there is no need to worry about the low number of short-term M & A transactions, which is a normal phenomenon of structural adjustment in the M & A market and a benign ecological change in the capital market in the long run.
Small-cap stocks are no longer "for sale"
Among the nine provisions of the new "National Nine articles", three are related to mergers and acquisitions, including the "rules for the examination of Major assets reorganization of listed companies (draft for soliciting opinions)", the "listing Review Committee and the Management measures of the merger and reorganization Review Committee (draft for soliciting opinions)" two documents related to M & A; among the documents related to the delisting system, M & A has also been given a lot of ink.
M & An is one of the key points of the new "National Nine articles" and its supporting policies and systems. The market also reacted quickly to it.
A person in charge of M & A business of investment banks told reporters that only a few days after the release of the new rules, executives of small-cap stocks took the initiative to consult them on issues related to M & An and restructuring, hoping to find suitable buyers as soon as possible.
Before the release of the new rules on mergers and acquisitions, this phenomenon was hard for the person in charge to imagine. "in the past, investment banks took the initiative to talk to small-cap companies, they intended to sell but expected a premium too high, but companies with a market capitalization of 2 billion wanted to sell 4 billion." After the release of the new rules, it is clearly felt that the premium expectation of real controllers of small-cap stocks has decreased significantly, and the enthusiasm for selling is much higher than in the past. "
According to the person in charge of the above-mentioned M & An and restructuring business, small-cap stocks with such a big reversal of attitude have two major characteristics: on the one hand, the market capitalization is small, usually around 2 billion yuan; the net profit is not high, mostly in 70 to 80 million or even 300, 000; on the other hand, the company's market capitalization and profit are limited, but the overall texture is OK, and there is basically no risk of delisting before the introduction of the new rules on M & An and reorganization on April 12.
The real controller of this kind of small-cap stock has long intended to sell the company, but because the enterprise does not have the risk of delisting in the short term, the demand of the "shell" resource market is high, and the stock price affected by the market is too low, so the demand for transaction price is generally high. However, the introduction of new rules on mergers and acquisitions "threw a basin of cold water"-delisting probability increased, crack down on violations of the "shell". This means that the "shell" resources given by small-cap companies are no longer valuable, and the risk of being forced to delist increases.
Affected by this, some real controllers of small-cap stocks who were unwilling to sell for a long time were worried and took the initiative to find brokerage investment banks in order to find buyers as soon as possible.
As more real controllers of small-cap stocks agree to lower the sale price, a number of investment bank officials expect both "An eat A" business activity and transaction rate to increase this year.
High activity and low transaction rate
According to the interviewees, the activity of the M & A market has increased significantly since the Spring Festival.
On the one hand, there has been an increase in the number of sellers willing to sell at a discount, and some companies that used to pin their hopes on the Beijing Stock Exchange have chosen to sell at reduced prices after realizing that there is little hope for a listing on the North Stock Exchange.
On the other hand, with the recovery of the economy, the buyer's capital abundance increases, the purchasing strength increases, and he is willing to buy at a relatively higher price.
However, the increase in market activity is not the same as the increase in actual trading volume in the short term.
According to Li Xinggang, managing director of Yichuang Investment Bank, the primary factor is valuation. Under the influence of the uncertainty of the international situation, the domestic economy is facing multiple pressures such as demand contraction, supply shock and weakening expectations. the operating performance of some of the target companies is at a low level, which can not reflect the value normally, which leads to the reduction of the selling enthusiasm of the target companies. Higher-quality targets still consider independent listing paths. Compared with Science and Technology Innovation Board and gem listed companies, the valuation multiple of listed companies on the gem is generally high, the low valuation of the subject matter of M & A leads to the seller's lack of sufficient motivation to trade, and it is difficult for buyers and sellers to negotiate. After the tightening of IPO, many enterprises still hold a wait-and-see attitude, although they have the will to negotiate, but the transaction rate is not high.
Secondly, the participants in M & An are not well prepared in the aspects of comprehensive use of capital operation means, synergy research and judgment, relevant compliance requirements, talent reserve for M & A, and so on. In the previous research period, there is a lack of analysis on the difficulties of running-in, business philosophy, business matching degree, whether the synergy effect can cover the premium and other aspects, and the poor communication information at each stage finally leads to the collapse of the negotiation.
In addition, drastic changes in the market and unstable operation of the target companies are also important reasons for the failure of mergers and acquisitions.
In addition, according to the analysis of Yin Zhongyu, assistant president of Fed Securities, the current M & An is mainly industrial M & A. compared with cross-border M & An and "backdoor listing", industrial M & A transactions are often more cautious and take longer time. It takes a long time from market activity to actual transaction, and it is difficult to succeed in just a few months.
According to Wind, only 15 major M & A projects have been completed since the beginning of the year, which is the lowest in nearly a decade; 6 less than the same period last year, and even more different from the peak of M & An in 2015-2019; the number of M & A projects completed in the same period from 2015 to 2019 is as high as 53, 74, 75, 50 and 57 respectively.
However, in the view of the interviewees, the low turnover in the M & A market is a normal phenomenon in the structural adjustment of M & An and restructuring in the capital market. The seemingly high turnover of M & An in the past is mainly due to cross-border mergers and acquisitions and "backdoor listing". Although they can enrich the volume of M & A transactions, they have side effects on the development of the capital market. Nowadays, further cracking down on backdoor listing after few cross-border mergers and acquisitions is bound to lead to a decline in M & A turnover for a period of time, but it is good for the long-term development of the capital market.
"with the landing of more industrial mergers and acquisitions under negotiation and the implementation of new rules on mergers and acquisitions, the actual trading volume of mergers and acquisitions will naturally increase steadily." Yin Zhongyu said.
Three new trends
In the view of the interviewees, the improvement of the current M & A market activity and the relatively limited short-term trading volume stem from the successive introduction of a series of M & A policies and the phased tightening of the IPO pace since August 2023. In particular, the introduction of a series of new rules on M & An on April 12 further makes the M & A market enter a new stage.
First of all, industrial mergers and acquisitions have become the mainstream trend of mergers and acquisitions, and the advantages of the head company are highlighted.
The "opinions on the strict implementation of the delisting system" issued on April 12 stipulates that industrial mergers and acquisitions as the main line, support the implementation of market-oriented absorption and merger of listed companies in the same industry and upstream and downstream under different control, and take high-quality head companies as the "main force" to promote absorption and merger among listed companies.
The "New deal of M & An is expected to lead the capital market to a new level-2023 A-share M & A market summary and 2024 outlook" issued by the 21st Century Capital Research Institute and Federal Reserve Securities M & A Research Center mentioned that leading companies with large market capitalization or industry segmentation can obtain more M & A resources, and the space for future development will be wider. More importantly, with the continuous tightening of IPO policies, more and more quasi-IPO enterprises will be merged by industry leading listed companies. Before, large-scale IPO fund-raising led to repeated investment construction in subdivided industries, and the situation of overcapacity caused by excessive capital inflows will also be changed, and the industry ecology and competition pattern will be more conducive to the growth of leading companies.
Secondly, state-owned listed companies are expected to occupy an important position in the M & A market.
Li Xinggang concluded that since the beginning of this year, the guiding funds of state-owned assets or state-owned assets in the M & A market have performed prominently in terms of industrial investment, and the mode of cooperation has been constantly innovating and the scale has been gradually expanded. The target is mainly focused on biomedicine, high-end equipment, new energy and other science and technology, advanced manufacturing industries.
As an important carrier of state-owned capital, central state-owned enterprise holding listed companies account for a large share of the total market value of A-shares, covering strategic and basic industries such as energy, transportation, communications, military industry, finance and so on. The above advantages are beneficial for state-owned enterprises to integrate industry high-quality assets and resources through mergers and acquisitions, and form greater industrial synergy. At the same time, active policy guidance makes enterprises with the background of state-owned enterprises have a stronger driving force to actively seek mergers and acquisitions.
In addition, as the focus of M & A support, technology enterprises may be more concentrated in M & An in the future.
The "16 measures for the Capital Market to serve the High-level Development of Science and Technology Enterprises" issued on April 19 is clear to promote the efficient implementation of mergers and acquisitions of science and technology enterprises. We will continue to deepen the market-oriented reform of mergers and acquisitions, formulate rules for targeted convertible bonds restructuring, optimize the small and rapid audit mechanism, and appropriately improve the inclusiveness of the restructuring valuation of light-asset science and technology enterprises. we will support science and technology enterprises to comprehensively use various payment tools such as shares, directed convertible bonds and cash to carry out restructuring, so as to help science and technology enterprises improve quality and efficiency, and become better and stronger.
In the view of the interviewees, the above policies support the strengthening of the current Science and Technology Innovation Board's "hard technology" attribute requirements and the improvement of the bottom line of listing net profits on the gem on the main board, and there will be more technology enterprises with relatively difficult IPO and limited capital in the short term to choose the road of mergers and acquisitions.