Affected by the phased tightening of IPO policies, A-share IPOs will shrink sharply in 2023. For the whole year, except for a slight decrease in the number of IPO companies on the Beijing Stock Exchange compared with the previous year, the number of IPOs in Shanghai and Shenzhen has decreased sharply in terms of both the number and the amount of funds raised, of which the amount of IPO funds raised by the Shanghai Stock Exchange has decreased by 4604%。
At the same time, the regulator has frequently expressed its support for the mergers and acquisitions of listed companies, and improved the system and rules. According to the statistics of brokerages, among the approximately 900 exit cases in 2023, the number of exit cases by mergers and acquisitions has surpassed IPO, becoming the most important exit channel for PE VC (private equity venture capital).
The M&A market is gradually heating up, and everyone's attention to M&A is obviously getting higher and higher. At the same time, from the perspective of the companies we have contacted, listed companies have become more and more rational in M&A in recent years. Chen Jie, head of the global M&A business of CICC's investment banking department, told Yicai that the M&A market experienced a particularly hot stage in 2015 and 2016, including chaos such as "flickering", "following the trend" and blind cross-border restructuring. In recent years, the regulatory authorities have continuously improved the relevant systems and deepened market-oriented reforms, and the M&A market ecology has undergone substantial changes.
It is worth noting that technology M&A is growing into the main track of China's M&A market.
The capital market is the main channel for mergers and acquisitions, and the activity of the M&A market is closely related to the strength and willingness of listed companies. After the establishment of the Science and Technology Innovation Board and the pilot registration system, a large number of leading technology companies have been promoted to go public, and in order to maintain their competitiveness and leading edge, technology companies generally regard mergers and acquisitions as the most important starting point. Chen Jie said that especially in the field of hard technology, there are obvious professional barriers, many subdivisions, and the iteration speed of technology is also very fast. If technology companies only rely on independent research and development, not only the cost of investment and trial and error is high, but also very difficult, which may make enterprises miss development opportunities.
The "main force" of mergers and acquisitions appeared.
M&A and restructuring is an important way for listed companies to improve quality and efficiency, and listed companies are also an important buyer force for M&A and reorganization. Especially for technology companies, mergers and acquisitions are an indispensable way to grow.
From a global perspective, the vast majority of buyers in large M&A transactions are listed companies. Chen Jie told reporters that listed companies have relatively better financing channels, incentive mechanisms, and governance methods, and are very important M&A buyer groups. Among them, the leading technology-based enterprises are the most potential force.
The technology industry runs the risk of "losing a generation" once it is one step behind, and when a new generation of technology is developed, the production capacity of the older generation is likely to be obsolete. However, due to the characteristics of high scientific and technological barriers, many subdivisions, high R&D investment, and long R&D cycle, it is determined that enterprises cannot completely rely on independent research and development to achieve technological improvement.
Technology entrepreneurs generally have to maintain a high degree of acumen, always pay attention to the frontier of technology, closely track the early enterprises in the frontier field, and at a certain stage, quickly lock in the core position through mergers and acquisitions. Chen Jie said that this is also the main way of the global technology leader.
According to her observation, since 2023, a number of optimization measures have been introduced in the M&A and restructuring policy, such as extending the validity period of financial information and improving the payment method of M&A and restructuring, which has produced a real role in promoting in practice. At the same time, the enthusiasm for mergers and acquisitions of technology companies is also increasing rapidly, and many top technology companies have shown strong interest in mergers and acquisitions. These entrepreneurs often have some common characteristics - they have an international vision, are rational and pragmatic, and have deep thinking about the technical route and the long-term development of the enterprise.
According to the statistics of ifind database, the "young force" of the M&A market has appeared. From the data of 2022, it can be seen that the number of asset acquisition transactions initiated by "young" listed companies that have been listed for less than 3 years has increased significantly, with a total of 887 transactions throughout the year, accounting for 22% of the total transactions, and the scale of transactions reached is about 150 billion yuan, doubling the number and scale of transactions compared with 2021.
The IPO complex "faded".
According to exchange data, the total number of IPO companies in the three major markets of Beijing, Shanghai and Shenzhen in 2023 will be 313, a decrease of 108 from the same period last year.
Among them, the number of IPO companies in Shanghai was 103, a year-on-year decrease of 51, a decrease of 3312%；The IPO financing amount of the Shanghai Stock Exchange was 193.6 billion, a year-on-year decrease of 4604%。* The number of IPO companies was 133, a year-on-year decrease of 54, a decrease of 2888%；*IPO proceeds of 14815.7 billion, a year-on-year decrease of 2996%。Driven by the deep reform measures, the Beijing Stock Exchange has maintained a relatively stable pace of IPOs. As of the end of 2023, there were 239 listed companies on the Beijing Stock Exchange, and the number of listed companies that year was 77, a slight decrease from 80 in the previous year.
At the same time, the IPO withdrawal rate continues to remain high. A total of 271 companies terminated the IPO process in 2023, compared to 279 in 2022.
Chen Jie analyzed that in mature markets, IPO and mergers and acquisitions are important basic functions of the capital market, some companies are more suitable for IPOs, and some companies can better release value and potential through mergers and acquisitions. In the case of the adjustment of the pace of IPOs, more companies will indeed begin to seriously think about the choices that suit them and take mergers and acquisitions into the scope of their vision, which is also driven by the exit needs of investment institutions.
From the perspective of buyers of listed companies, large-capitalization companies or industry leading companies occupy certain advantages in industrial contacts, financing capabilities, talents, experience, technology and other aspects, have more M&A options, stronger delivery capabilities and anti-risk capabilities, and are competitive potential M&A buyers.
From the perspective of the industry, technology companies naturally have more M&A genes.
Chen Jie told reporters that on the one hand, many technology entrepreneurs agree with the entrepreneurial culture, have a high degree of acceptance of mergers and acquisitions, and do not insist on the control of the enterprise, nor do they take listing as the only goal. On the other hand, the market ecology has changed, and under the overall goal of improving the quality of listed companies, resources will be more concentrated in the head companies, and for some small leaders in the subdivision track or enterprises in the second echelon of the industry, mergers and acquisitions may be a better choice for enterprise development.
In addition, at present, it is difficult to raise funds in the primary market, it is difficult to exit, and the track is piled up, which is very "involution", and many investment institutions will also readjust their strategies and positioning, and take mergers and acquisitions as an important way to exit, which is conducive to the activity of mergers and acquisitions.
The ebb and flow of mergers and acquisitions has ebb.
In the M&A boom in 2015 and 2016, there were not only "flickering", "following the trend" and blind cross-border restructuring, but also frequent "snake swallowing elephant" M&A transactions. Although when the news was announced, the listed companies harvested one after another, but after the "chicken feathers", the stock price also experienced a large **.
According to the statistics of the Wind database, in 2022, A-share listed companies disclosed a total of 135 major asset acquisitions for the first time, of which 67 were market-oriented transactions, accounting for about 50%. In January and October 2023, A-share listed companies disclosed a total of 92 major asset acquisitions for the first time, of which 53 were market-oriented transactions, accounting for about 58%.
Although there are still some short-term mergers and acquisitions or backdoor restructuring expected hype in the ** market, there is almost no change in the stock price before and after the backdoor restructuring.
Taking the four backdoor listings disclosed for the first time in 2022 as an example, the short-term stock price rise and fall is measured from 1 day before the suspension to 10 trading days after the disclosure of the plan, and the long-term stock price rise and fall is measured from the date of the plan disclosure to the last trading day in 2022.
A mature market isn't going to pay for you the moment you announce a merger. Unless, at the end of the day, you can actually deliver results. Chen Jie told reporters that after the merger and acquisition reached cooperation, there are many links such as approval, delivery, and integration, and the success of integration is the real success, and the announcement of mergers and acquisitions is still a long way from the final success.
For example, in Danaher's 2015 acquisition of Pall Group, more than 50 Danaher employees were involved in the implementation of the integration plan, and more than 300 events were held within the first year after the acquisition to improve and optimize its operations.
In her view, the success of integration is all about the details, and many problems exposed by mergers and acquisitions in the integration stage are actually "mines" buried in the due diligence stage.
M&A is a tandem success, with no room for error at every step, from due diligence, planning, negotiation to integration. Chen Jie said that companies need to do two things before doing mergers and acquisitions. First of all, we must measure our own risk tolerance, assess how much of the target we can digest in our own volume, the risk of "snake swallowing elephant" is huge, and it is best to do what we can. At the same time, it is also necessary to measure their follow-up integration capabilities, as well as to have a reserve of professional talents.