"Since this year, our M&A and restructuring business has only had 1 meeting, and 3 orders are under review. Even this is the first in the market." Lao Zhiming, executive director of Huatai United Securities and head of M&A business, told a reporter from China Securities Journal a few days ago.

In recent years, with the steady progress of the A-share registration system reform, high-quality assets have sought IPOs one after another.

Under the "seesaw effect", the once-hot M&A market continued to cool down.

　　At the same time, the “scissors gap” between the IPO of small-cap companies and the value of the acquired company continues to narrow, and the number of mergers and acquisitions along the industry chain is increasing. The merger and acquisition of A-share listed companies is gradually normalized , a new change has emerged.

seesaw effect

　　Zhang Yang (pseudonym) is the head of the investment department of an A-share listed biopharmaceutical company. "Extended expansion" has always been the company's core growth logic.

What worries Zhang Yang is that the company has not "recorded" any projects for more than a year.

"Some projects that have been tracked for a long time, when we are preparing to negotiate acquisitions, the other party suddenly intends to IPO. This situation is becoming more and more frequent."

　　With the steady progress of the registration system reform, IPOs remain normalized.

Wind data shows that from 105 in 2018 to 524 in 2021, the compound annual growth rate of A-share IPOs will reach 70.88%.

The number of M&A and restructuring projects will drop from 336 in 2015 to 47 in 2021.

　　"Compared with being acquired, IPO can not only raise funds, but also have its own listing platform to achieve independent development." Lao Zhiming told the China Securities Journal reporter, "IPO is the dream of many entrepreneurs, so with the continuous smooth IPO channel , Most of the high-quality targets in the M&A and restructuring market are heading for IPOs.”

　　The targets of mergers and acquisitions have decreased sharply, and high-quality targets are even rarer.

In an interview with a reporter from the China Securities Journal, Yin Zhongyu, head of the Fed's securities mergers and acquisitions business, said, "In 2021, 47 projects will be held, but 6 have not been held. The main problems are reflected in sustained profitability, rationality of performance forecasts, and goodwill. In terms of proportion, etc., the bottom line is that the continued profitability of the M&A target is not good.”

　　"Several investment banks with cooperative relations have not introduced projects to us for a long time." Zhang Yang told a reporter from China Securities Journal.

　　As a leading brokerage in the merger and reorganization market, Huatai United Securities also felt the coolness.

"We are facing a lot of pressure to expand our business, and many investment banks have even given up the business of mergers and acquisitions." Lao Zhiming said.

　　Some investment bankers thought that the merger and acquisition market in 2021 had "falled to the floor", but they did not expect that the situation in 2022 would not be optimistic - so far, only 7 projects will be held.

"From the buyer's point of view, in the face of the complex environment in 2022, listed companies will be more cautious in their extensional expansion." Wang Jiyue, a market person, told a reporter from China Securities Journal.

Valuation gap narrows

　　"We are operating a merger and acquisition project, and the target is a company with an annual profit of 80 to 90 million yuan. It stands to reason that it has reached the IPO standard, but the company still chooses to be acquired by a large industrial group." Yin Zhongyu told a reporter from China Securities Journal that in the merger and reorganization While the market continues to be cold, positive factors are quietly brewing.

　　"The steady progress of the A-share registration system reform does not mean that IPOs are easier. For small companies with average quality, it is more and more difficult to sell at a good price." Lao Zhiming pointed out.

　　As the market becomes more mature and rational, it is not uncommon for new shares to break on the first day of listing.

Wind data shows that since the beginning of this year, among the 95 new stocks listed on A-shares, 24 broke on the first day of listing, accounting for 25.26%.

　　Small-cap companies continue to shrink in value over time.

The Federal Reserve Securities used 105 listed companies as a sample (issued and listed in a registration-based manner in 2020 and deducted non-net profit of 50 million to 150 million yuan in 2020). Statistics found that from the first day of listing to the close of market on March 15, 2022, the market value of Those with less than 4 billion yuan increased from 8 to 67, and those with more than 7 billion yuan decreased from 55 to 17.

　　"There is no substantial difference in valuation between small companies choosing IPO and being acquired. Assuming that a company has a net profit of 100 million yuan and is valued at a price-earnings ratio of 20 times, the valuation it chooses to be acquired can also reach 2 billion yuan. There is no need to bet on performance, and shareholders can directly exit with profit, especially for institutional investors, choosing to be acquired not only saves the time cost of 1 to 3 years after the IPO, but also does not have to bear the risk of falling market value.” Yin Zhongyu express.

　　In fact, high-value mergers and acquisitions are not uncommon.

Lau Zhiming pointed out, "For example, a technology company's patented technology has great value for the development of another company, then this company may acquire it at a high price. Both Apple and Google have conducted similar mergers and acquisitions in the process of core technology layout. It seems that the price High, but not high consideration given the value it brings to the business.”

　　Dong Dengxin, director of the Institute of Finance and Securities of Wuhan University of Science and Technology, pointed out in an interview with a reporter from China Securities Journal: "Actually, from the perspective of long-term development of enterprises, many enterprises have been acquired by large enterprise groups, and they have obtained new opportunities through resource grafting and business synergy. It is more conducive to the growth of enterprises than independent development through IPO.”

Accelerate the metabolism of the A-share market

　　Can mergers, acquisitions, reorganizations and IPOs only be the two ends of the "seesaw"?

"The two are not a simple binary opposition, but can work together in capital market reform." Lao Zhiming pointed out, "With the steady progress of the registration system reform and the continuous improvement of the diversified exit mechanism, mergers and acquisitions will accelerate A Metabolism."

　　In terms of improving the exit mechanism of listed companies, the "Opinions on Further Improving the Quality of Listed Companies" issued by the State Council emphasized that it is necessary to expand diversified exit channels, improve the systems of mergers and acquisitions, reorganization and bankruptcy reorganization, optimize processes, improve efficiency, and smooth active delisting. , mergers and acquisitions, bankruptcy and reorganization and other listed companies to diversify exit channels.

　　It is worth noting that, as an important path for mergers and acquisitions, "A eats A" has quietly emerged.

　　Wind data shows that in 2021, there will be 13 cases of A-share listed companies acquiring listed companies, a record high, and they are generally industrial mergers and acquisitions.

The Fed Securities predicts that as the valuation of listed companies continues to step into a reasonable range, "A eats A" will become normalized.

　　"Many small and medium-sized listed companies with core competitiveness have PB multiples of less than 1, so these listed companies can be used as industry leaders for mergers and acquisitions." Yin Zhongyu pointed out.

　　Since 2022, following the logic of industrial mergers and acquisitions, "A eats A" has attracted more and more attention.

For example, when JD Logistics acquired Debon Logistics, it was interested in Debon Logistics’ important position in the bulky cargo transportation market, and had a significant industrial integration effect with JD Logistics; Zoomlion’s acquisition of Luchang Technology was interested in The technology accumulation of Luchang Technology in intelligent driving can effectively enhance the market competitiveness of Zoomlion's products.

　　At the same time, from the perspective of industry, with the mass listing of high-quality companies in the industry, the future industrial integration is expected to be more carried out between listed companies and between listed companies and non-listed companies.

　　If you jump out of the framework of listed companies, you can also find that new changes are emerging in the merger and acquisition market.

　　"The extensional expansion of listed companies can no longer fully represent the future direction of mergers and acquisitions." Lao Zhiming pointed out, "We are also paying attention to the mergers and acquisitions of non-listed companies, including the exit of PE in the primary market, and the in-depth integration of industry leaders."