First, "capital replacement" is profitable. M&A funds can reduce corporate liabilities by injecting capital, that is, resetting the balance sheet or adjusting the capital structure.
II. The income from "asset reorganization" is from 1+ 1 > 2 or 3- 1 > 2. M&A funds can participate in a series of activities, such as asset sorting, divestiture and addition, to form a new and recognized asset portfolio for enterprises, and then transfer it through mergers and acquisitions, thus realizing income.
The third is the "improved operation" method. In many cases, M&A funds do not only rely on the injection of capital to realize the return on investment, but also guide and participate in the daily operation of the invested enterprises, improve the operating performance of the enterprises and finally gain profits.
The fourth is to make profits through "tax burden optimization". Generally speaking, the pre-tax debt cost is lower than the equity cost; If the interest cost of debt is tax-free, then this reduces the after-tax debt cost.
The fifth is the "backdoor profit" method. At present, I want to buy the shells of companies listed on the main board of Hong Kong, which has increased from HK$ 200 million in previous years to HK$ 340 million.
The sixth is the "process profit" method. Because any major M&A case will involve "transaction structure design", including the payment method of M&A transaction can be cash, stock exchange or a payment treaty with the nature of "gambling"; The design of transaction structure also includes the choice of financing instruments.
Seventh, the profit mode of "company restructuring". This is a profitable way of M&A fund with China characteristics, that is, through the intervention of M&A fund, the original "pure state-owned" or "pure family" corporate governance structure is broken, and a more scientific and reasonable board of directors, corporate governance system and incentive system are established. , from the source to change the behavior of enterprises and corporate culture, in order to obtain better business performance returns.