Four Suggestions To Promote M & A And Restructuring

Yang Ping, a researcher at the securities merger and acquisition research center of the 21st Century Capital Research Institute, reports from Shenzhen

After the Capital Research Institute of the 21st century and the Federal Reserve securities formally established the M & A Research Center, the "2020 A-share M & a market report" pointed out that with the steady progress of the registration system, the capital logic of IPO and M & A is undergoing significant changes.

Melting ice and snow, blooming spring

Three sets of data constitute the "main tone" of the current A-share M & a market.

1、 Major asset acquisitions have declined for five consecutive years. In 2020, 117 major asset acquisitions initiated by A-share listed companies have decreased by 22.52% year-on-year;

2、 The number of projects with a transaction amount of more than 2 billion yuan encountered "Waterloo", which was nearly cut back compared with that in 2019. The average transaction amount of each major asset acquisition was RMB 2.727 billion, a decrease of 43.7% year-on-year;

3、 The approval rate of reorganization was only 82.76%, the lowest in history.

However, judging from the current economic environment, policies and rich experience of first-line investment bank M & A, 21 capital fed M & A Research Center believes that the A-share M & a market is expected to start to bottom and rebound in 2021 for two main reasons

First, the scale and number of major asset acquisitions of listed companies have declined for five consecutive years, and many irrational cross-border acquisitions and "three high" transactions have been squeezed out, and they are in a situation that can not be reduced;

Second, in the era of registration system, the performance differentiation of new shares is increasingly obvious, and the issue of broken shares is more and more common. With the steady progress of registration system and the general decline of asset quality, IPO valuation will accelerate to return to a reasonable range, and the valuation gap with M & A will gradually narrow.

If the first day of IPO breaks out in a large area in 2021 and continues to occur, it means that the rationality of IPO valuation in China's capital market will have a historic breakthrough, the valuation advantage of IPO will no longer lead M & a significantly, the mentality of enterprise owners will also change, and the new opportunity of M & A will come.

In the future, if A-share IPO breaks and continues to occur on the first day of listing, it indicates that China's capital market has a good market pricing function, and the price adjustment mechanism has begun to play a role.

21 capital fed M & A Research Center believes that at that time, the A-share M & a market will usher in the season of "ice melting and spring flowers blooming", and the long-awaited "slow bull market" is expected to appear in the A-share market.

1、 It is suggested that listed companies should be allowed to go bankrupt, restructure and liquidate

Although the number of bankruptcy reorganization of listed companies reached a new high in 2020, the bankruptcy liquidation of listed companies has not yet achieved "zero breakthrough". Under normal circumstances, local governments and courts will strongly support and take special care of the bankruptcy reorganization of local listed companies. As a result, none of the bankruptcy reorganization of listed companies fails, which is not a normal phenomenon.

Therefore, we suggest that local governments or judicial departments should comply with the market trend and allow listed companies to fail in reorganization and bankruptcy liquidation. This is not only in line with the natural law, but also plays an irreplaceable role in the system construction of the capital market, so that small and medium-sized investors can fully experience the "ultimate risk" of investment, To promote the market valuation of small and medium-sized stocks and poor performance stocks to return to the rational track as soon as possible, and lay the foundation for the registration system to take root in China's capital market.

2、 It is suggested that the policy of war investment should be made clear as soon as possible

At present, the definition standard of strategic investors is not workable. In 2020, most of the fixed price increase schemes introduced by war investment will either be terminated or adjusted to fixed price increase through inquiry. It will not be until February 2021 when the lock price fixed increase of Debang shares is approved, that the introduction of the fixed price increase scheme of listed companies into the war investment "ice breaking".

Through this case, we suggest that the lock price issue of pre locked war investment should not stay in the fuzzy stage, and the standard should be clear to improve the operability. If it is difficult to identify the identity of strategic investors, it is suggested to consider from the time dimension of lock in. For example, strategic investors who have voluntarily locked in for more than 36 months can enjoy the fixed price increase. Only when the standard is clear can it be really conducive to the introduction of strategic investors by listed companies, but also conducive to the rapid reform of state-owned enterprises.

Up to now, the mixed reform of state-owned enterprises is mostly carried out at the level of controlling shareholders of listed companies. One of the important reasons for this "detour" is that it is difficult to identify the identity of war investment in the actual operation of lock price issuance.

3、 It is suggested that we should promote the mixed reform according to the industry and reserve a "private plot" for the private economy

In recent years, there have been many cases of mixed reform of state-owned enterprises, but the voice of criticizing private enterprises to encounter various "glass doors" has never stopped.

Therefore, we believe that if the promotion mode of the mixed reform of state-owned enterprises is slightly adjusted and promoted according to the industry in which the state-owned assets belong, the social effect of the mixed reform of state-owned enterprises can be better manifested.

In the specific operation, the SASAC of the State Council can regularly publish the list of industries to promote the mixed reform of state-owned enterprises. Once an industry is listed in the mixed reform plan by the state, all state-owned enterprises or the operational assets owned by state-owned enterprises related to the industry must complete the task of mixed reform within a limited time.

For industries with full competition and lack of comparative advantage of state-owned enterprises, or industries with obvious conflict between the two ownership enterprises, the state can uniformly require that state-owned capital no longer hold the controlling position after the mixed reform.

In order to fully accumulate reform experience and maintain social stability, in the first 1-2 years, the state can start with a number of subdivided small industries, and then gradually advance to industries with wide distribution of state-owned assets and great social influence, so as to draw a "private plot" without interference of state-owned assets for the development of private economy.

4、 It is suggested that the judicial department should carry out routine inspection on delisted companies

In the past two years, more and more listed companies have delisted from A-share market, which are basically "delisting with illness". Many companies have hidden criminal acts such as transferring assets of listed companies through false mergers and acquisitions before delisting.

Although the damaged minority shareholders can file a claim against the parties concerned, it is unlikely that the minority shareholders will get full compensation because the major shareholders and actual controllers of the listed companies have already been insolvent or have run away.

In order to avoid delisting listed companies as a legal way for a few criminals to escape the severe punishment of law, we suggest that the relevant departments should formulate policies as soon as possible, clearly stipulate that the delisting of listed companies must be routinely inspected by the local public security and law departments, and the judicial departments should take the initiative to look for clues of illegal crimes and initiate public prosecution in time, which will greatly enhance the deterrent power of delisting system.

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