Some enterprises can't maintain normal operation in the frequent market competition. In order to prevent companies from going bankrupt and protect employees' interests, these companies will choose mergers and acquisitions to solve this crisis.

M&A and enterprise reorganization means that some enterprises can't continue to operate normally for some reasons when they merge and transfer their shares according to certain procedures, so as to realize the transformation of enterprises and achieve the purpose of enterprise reorganization. At present, there are mainly the following modes:

Mode 1: Listed companies are the main investors of direct investment in mergers and acquisitions.

Advantages: Equity merger and acquisition can be directly carried out by listed companies without using cash as payment consideration; Profits can be directly reflected in the statements of listed companies.

Disadvantages: the market value of the enterprise is low, and the dilution rate of equity is high; It is troublesome for listed companies to directly initiate mergers and acquisitions as the main body, which involves the decision-making process, corporate governance, confidentiality, risk tolerance and financial profit and loss of listed companies. After the merger, the business profits were not released as expected, which affected the profits of listed companies.

Mode 2: Major shareholders set up subsidiaries as investors to invest in mergers and acquisitions, and inject them into listed companies when their businesses mature.

Advantages: it does not directly dilute the equity at the level of joint-stock companies; If the sub-business develops well in the future, assets can be injected into the joint-stock company; Through this structure, the company can selectively inject assets into listed companies according to the capital market cycle, the performance of joint-stock companies and the operation of sub-businesses by setting up a project "reservoir" under the controlling shareholder, which is more active; Equity can be opened at the subsidiary level. For the management team of the acquired enterprise, if it operates well in the future, it can inject assets into the listed company, thereby increasing the equity value or holding shares directly at the level of the listed company, thus achieving listing, which has a high incentive effect.

Disadvantages: limited scale. For example, the establishment of a wholly-owned subsidiary or holding subsidiary requires a large amount of capital contribution from major shareholders. If you don't hold shares, the major shareholder loses control; The performance of subsidiaries or projects can not be included in the consolidated statements of joint-stock companies, and can not have a positive impact on the statements of listed companies after mergers and acquisitions; The company needs to set up a special M&A team to conduct project scanning, M&A negotiation and transaction structure design. This requires the acquisition of higher investment capacity and talent pool.

Mode 3: The industrial investment fund invested by the major shareholder will be the main investor to invest in mergers and acquisitions, and will be injected into the listed company after the sub-business matures. In addition to the advantages listed in Mode 2, it has the following advantages:

Advantages: Large shareholders can drive more social capital or government capital to initiate industrial investment mergers and acquisitions only by contributing a part; Cooperate with professional investment management companies to solve the problems of merger and acquisition ability and post-investment management; Through the design of the fund structure, you can make decisions together with the fund manager or have more decision-making power.

Disadvantages: the brand power of the major shareholder is limited in the case of weak influence, and the contribution of the major shareholder is needed in the early stage.

Mode 4: Industrial investment funds are established by listed companies, as the main body of investment, and injected into listed companies after the sub-business matures. In addition to the advantages of Mode 2 and Mode 3, it also has the following advantages:

Advantages: You can use the brand power, influence and reputation of listed companies to incite more social capital and governance.

Disadvantages: Because the capital market environment in China is very different from that in foreign countries, the major shareholders or actual controllers of listed companies are rarely fund investors, so few companies can form a model with listed companies by virtue of the strength of major shareholders. The third part describes few models of industry-finance interaction. With the continuous development and maturity of private equity funds and M&A market in China, more and more listed companies choose to cooperate with private equity funds to set up M&A funds for foreign investment and acquisition. M&A fund plays the role of industrial incubator for listed companies, locking in strategic high-quality resources in advance and injecting them into listed companies after maturity.

Different modes of enterprise merger and reorganization will not only affect the operation of enterprises, but also have a great impact on the participation mode and final benefit distribution of the original companies. Therefore, when choosing to merge and reorganize enterprises, we should also choose a model that is more suitable for the company according to local conditions.

The merger and reorganization of listed companies is the merger and reorganization of various production factors between companies, with complementary advantages and rectification of disadvantages. Theoretically speaking, for the acquired or merged companies, mergers and acquisitions will make people have positive expectations for the acquired or merged companies, thus making the stock prices of these companies rise. Although it may not have a positive impact on the acquirer in theory, most of the mergers and acquisitions in China's capital market are beneficial to listed companies, because for the acquirer, most of the assets injected into these companies are high-quality assets, with good future profit prospects. Many investors study the obvious characteristics of stock restructuring before suspension to find such stocks.

Judging from the current concept stock market of M&A and restructuring, the impact of M&A and restructuring on the stocks of related companies is indeed positive and beneficial. In recent years, M&A concept stocks have always been the darling of the market. As long as there are mergers and acquisitions, the company's share price will continue to rise. It is worth noting that behind the sharp rise in the company's share price due to restructuring, there is always a trap of injecting high-valued and low-profit assets.

Seeing this, everyone should know the mode, advantages and disadvantages of M&A of listed companies. Want to know more about investment knowledge, please pay attention to us!