Mergers and acquisitions are gradually heating up
2024-04-11
According to relevant data, based on the first announcement date and excluding failed cases, as of April 8th, a total of 587 merger and acquisition events have been disclosed in the A-share market since the beginning of this year, a significant increase compared to the same period last year. The new wave of mergers and acquisitions serving technological innovation and modern industrial system construction is gradually heating up. Multiple factors are driving the market to warm up, and mergers and acquisitions are surging due to the joint efforts of multiple factors. The industrial transformation and value chain reshaping brought about by China's technological development and economic transformation and upgrading provide enormous opportunities for mergers and acquisitions. "Economic structural changes are an important driving force," said Liu Zhe, joint head of investment bank mergers and acquisitions at CITIC Securities. Currently, China is at a critical juncture in the transformation of old and new driving forces, and the industrial structure is undergoing profound changes. Mergers and acquisitions are important ways for enterprises to optimize resource allocation and enhance competitiveness. Especially with the rapid development of new generation information technology, high-end equipment, new materials, new energy, energy conservation and environmental protection, biopharmaceuticals and other industries, listed companies are seeking to acquire new technologies and applications through mergers and acquisitions to seize market opportunities and achieve leapfrog development. "Mergers and acquisitions can help improve the quality of listed companies. In the long run, mergers and acquisitions will become an important channel for enterprise securitization and investment exit." Zhang Zhongwei, Managing Director of CITIC Securities and Head of the Mergers and Acquisitions Department of the Investment Banking Commission, stated that mergers and acquisitions, as an important means of market resource allocation, are conducive to improving the efficiency of capital market fund allocation, accelerating the capital circulation of investment institutions, promoting the flow of funds to key industries, serving national strategic needs, and promoting high-quality development of the national economy. In 2023, due to the shrinking scale of A-share IPOs, the proportion of exit cases through mergers and acquisitions has surpassed IPOs in approximately 900 cases throughout the year, becoming the main exit channel for PE/VC (private equity investment/venture capital). Experts say that currently, IPO to M&A remains active, and M&A has become an important channel for financial investors to exit. At the same time, the pace of acquiring listed companies and conducting capital operations based on listed platforms is accelerating. "From a global market perspective, the vast majority of buyers in large-scale M&A transactions are listed companies," said Chen Jie, head of global M&A business at CICC's investment banking department. Technology leading enterprises are the most promising force. The characteristics of high technological barriers, multiple segmented fields, high R&D investment, and long R&D cycles determine that technology enterprises must be good at paying attention to the forefront of technology, closely tracking early enterprises in cutting-edge fields, and quickly locking in the core position of the industry through mergers and acquisitions after reaching a certain stage. This is also the main strategy of global technology leaders. Liu Xiaodan, founder of Chenyi Fund, believes that systematic opportunities have emerged in China's M&A market. The three driving factors of M&A, namely industrial competition, capital market, and corporate governance, are becoming increasingly mature. The breadth and depth of the market are constantly expanding, and both buyers and sellers are active, presenting a trend of both supply and demand. The M&A market is expected to continue to be active. The current round of active mergers and acquisitions, highlighting industrial integration, has distinct characteristics. Highlighting industrial integration, mergers and acquisitions pay more attention to industrial logic and synergies. Through mergers and acquisitions, the company has achieved integration of the upstream and downstream of the industrial chain, and overall competition of the enterprise
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