What Is The Dilemma Of The "Runaway" Dilemma Of "Good Couple"?

Mergers and acquisitions is an important channel to improve the quality of listed companies and promote industrial transformation and upgrading, but it is also a highly difficult "action". Proper integration and coordination will not only change the efficiency of the listed companies, but may also gain the merit of the "fish jumping gate". However, if the "bad luck is wrong", the "lucky ones" are lucky, and the enterprises dragged to the "edge of the delisting" are also few. The "runaway" of a subsidiary is one of the manifestations of the integration of "indigestion".

Recently, a number of listed companies such as Asia Pacific pharmaceutical, new Hongze and the Great Wall have lost control of important subsidiaries. The Asia Pacific pharmaceutical industry is unable to control the seal and business license of the new peak of Shanghai subsidiary company; the official seal of the Jiangsu Unicom era of the new Hong Zi Zi company was forcibly occupied and unauthorized; the jade education of the cultural the Great Wall subsidiary was approved by the board of directors to approve foreign investment and payment. Also, such as *ST cohesive force, *ST Wai Hai did not identify subsidiaries out of control, but there were subsidiary license, the official seal out of control and so on.

Behind the scenes of a runaway and uncontrolled episode, some of the listed companies are exposed to "willful" mergers and acquisitions, blindly chasing hot spots, weak internal control bases, and lack of necessary control and control capabilities, and the innocent investors involved are also suffering heavy losses in the farce of "commercial war".

It is undeniable that mergers and acquisitions are effective means to enhance the profitability of listed companies and promote industrial transformation and upgrading in the critical juncture of national industrial structure adjustment and quality and efficiency enhancement of the real economy.

Track the main line of supervision and resume the logic of "complaining".

In recent years, the phenomenon of "runaway" of subsidiaries has been reported frequently in newspapers. Reporters have reviewed the regulatory records of the exchange, and found that some of them are out of control or have long been traceable.

Signal one: is it true transformation or stock price and profit?

From *ST Tianrun 800 million acquisition point music or can get some enlightenment. In the past, *ST Tianrun, which had relied on property leasing for a long time to achieve a small profit, suddenly announced the acquisition of an online game company in April 2015, with an appreciation rate of 2672.15%.

After 2015-2017 years of deduction, the net profit was 65 million yuan, 81 million yuan and 102 million yuan respectively. After the plan was disclosed, *ST Tianrun's share price rose from 2.07 yuan / share to 7.45 yuan / share, and its market value increased from 1 billion 670 million yuan to 6 billion yuan. During that time, the Shenzhen Stock Exchange and regulators were concerned about the company's share price rising and subsequent integration and control.

At the very beginning, the performance of the target seems to be developing in the direction of prediction. In 2016, *ST Tianrun said that "little music" overfulfilled its performance commitments in 2015 and launched a high annual transfer plan of 10 increase of 30 in the half year. The exchange sent a letter requesting the company to check its stock transactions, and began to pay attention to the specific completion of the spot music performance pledge; in March 2017, *ST Tianrun indicated that the number of products in 2016 was 9. 5.66%, the exchange sent a letter to prompt the change of the performance of the spot music and pay attention to the reasonableness of the impairment of goodwill.

In April 2018, in the absence of symptoms, the proportion of spot sales in 2017 dropped to 26.58%. *ST Tianrun's goodwill allowance was 460 million yuan. In the face of the sharp fluctuations in the performance of subsidiaries, the exchange asked again whether the impairment of goodwill was reasonable. Is internal control of subsidiaries effective? Is the core team stable? Does management depend on individual personnel? What are the management and operation risks of subsidiaries?

At that time, *ST Tianrun replied that it intends to strengthen the control and control of the subsidiary company. At this stage, the impairment of goodwill is reasonable. But in February 2019, the company finally disclosed that the spot music was out of control. Since January 2018, it has no longer incorporated the spot music into the consolidated financial statements. It has once again made provision for impairment of assets 362 million yuan, and it has not been able to receive performance compensation 380 million yuan.

The occurrence of the runaway seems to be unexpected and unexpected, and the chicken feather left behind has caused investors to suffer losses.

Signal two: how hard is it to strike iron?

The "story of thousand feet pearl", the predecessor of innovative healthcare, is also wonderful. The Pearl River's Pearl River business, which was the main industry of freshwater pearls breeding, processing and selling, was severely damaged, and it suffered losses for two consecutive years in 2014 and 2015.

In June 2015, the company disclosed the restructuring plan, and proposed to cross border acquisition of Jianhua hospital and other three hospitals. After the implementation of the restructuring, Jianhua hospital retained the original management team, and promised that the net profit after 2016-2018 years of deduction was 105 million yuan, 123 million yuan, and 136 million yuan respectively.

However, oddly enough, the thousand feet pearl said that after the completion of the acquisition, resources will be integrated, but there is no mention of how to implement targeted integration plans and control measures. Such a large span transformation and vague integration plan has attracted the attention of the exchange. In the reorganization enquiry letter, the exchange inquired how the listed companies control the target, whether they have hospital management experience and talent reserves, and require the company to fully disclose the risk of business transformation.

In December 2016, because of the illegal occupation of Jianhua hospital's capital by the chairman of Jianhua hospital, the Shenzhen Stock Exchange gave its personal notification of disciplinary action, and the problem of weak internal control of the target initially appeared. In December 2018, the Shenzhen Stock Exchange paid close attention to the unusual behavior which the Jianhua hospital sold the land after its own sale. It sent a letter to the company requesting the company to check the defects in the internal control and financial management of Jianhua hospital.

In 2017 and 2018, the completed performance commitments of Jianhua hospital were 95.65% and 84.79% respectively. In response to this situation, the exchange inquired the reasons for the unfulfilled performance commitments and the performance of the counterparties, as well as the rationality of the impairment of goodwill.

In June 2019, because the performance compensation obligor failed to fulfill the obligation of compensation, the listed company submitted the arbitration to the court. In November 2019, the listed company said that Jianhua hospital refused to audit, and the contradiction between the two sides was escalated. The Jianhua hospital was out of control. The company decided to continue to incorporate Jianhua hospital into the consolidated financial statements in just 5 months. The play seems to have not yet come to an end.

"Happy couple" is not in nature but in "harmony".

From the foregoing cases, it is easy to see that cross industry mergers and acquisitions catch up with the concept and stir up themes, and make an agreement on the expected performance of gambling, the future profitability of overdraft assets, but do not take into account the following business and team integration; the underlying internal control base is weak, while the listed companies also have no targeted internal control system construction and integration plan. The necessary control and control capability, as long as the subsidiary companies cooperate with the audit, does not evaluate the integration effect.

In the industry view, to solve this problem, we must proceed from the source, improve the level of enterprise management and improve corporate governance. A listed company should start from its own development plan, make full investigations and prudent mergers and acquisitions, abandon stock speculation and buy profit based mergers and acquisitions, especially cross-border mergers and acquisitions, three high mergers and acquisitions, and intend to retain the original management team. We should give full consideration to how to implement effective control over subsidiaries, formulate detailed integration plans and schedule, and fully indicate the risk of integration.

At the same time, listed companies need to improve the level of corporate governance and attach importance to the continuous assessment of the integration process. Specifically, it includes strengthening control over the funds, seals and financial affairs of subsidiaries, sending personnel to key posts of subsidiaries, regularly looking back, assessing the progress, process and control of integration, analyzing the differences and causes of plans, and paying attention to the integration of corporate culture.

The difficulty of mergers and acquisitions is like a marriage. It can neither be "too tight" nor "let go too much". It needs careful choice and long-term running in. Participants must cooperate with each other and constantly adjust to make the "runaway" solution invisible. Investors should also clearly realize that "good luck" is not "applicable" in the capital operation of the A share market, and needs rational thinking.

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