"If you want to do your job well, you must first sharpen your tools." The same is true for capital operation. If companies want to expand, merge, and break through the ceiling, they must choose the right financing tools. In the vast financial market, the three major financing paths of rights issue, rights issue and bond issuance are like the "knife, sword and bow" in the capital arena - each has its own strengths and is suitable for different battlefields. How to choose the most suitable "weapon" to maximize the effectiveness of funds? Goheal will give you 3 minutes to disassemble the optimal capital operation plan today, so that financing is no longer a difficult problem to start with!
1. Rights issue: "Private customization" of the capital market
Applicable scenarios: major shareholders support, industrial investors enter the game, and are optimistic about the company's development in the long term
Private placement (abbreviated as "private placement") is like a high-end private customized capital feast. The company can accurately lock in specific investors and issue new shares privately at an agreed price. For companies with strong capital demand but unwilling to significantly dilute shareholders' equity, a private placement is undoubtedly a sharp "dagger" that accurately cuts into the heart of target investors and achieves a deep binding of capital and industry.
But the "beauty" of a private placement is not only this - it can introduce strategic investors and allow "allies" with resources and patience to accompany the company's growth. Imagine if a new energy company introduces a leading battery factory as a private placement target during the industry's inflection point, not only will the funds be in place, but it can also drive business synergy, which can be said to kill two birds with one stone. Goheal has witnessed the power of private placement in many cross-border M&A cases. A certain technology company attracted international capital through private placement and successfully opened up overseas markets.
Be careful of pitfalls: Although private placement is tempting, the approval cycle is long, and if the market conditions are not good, investors' lack of willingness to subscribe may lead to financing failure. Therefore, when choosing a private placement, companies must have sufficient market judgment and a strong investor communication strategy.
2. Rights issue: shareholders' "vote to increase holdings"
Applicable scenarios: There are already stable profits, and the company is willing to let old shareholders "add more stakes"
Right issue is like an "internal subscription meeting" held by the company for existing shareholders. If you are already a shareholder of this company and the company needs funds now, are you willing to pay more money in exchange for additional shares? This financing method allows shareholders to "vote with real money". If most shareholders are willing to participate, it means that the market has great confidence in the company.
The biggest advantage of this model is that it does not introduce external capital and avoids dilution of control. Some family businesses or companies with relatively stable core management often prefer this method. For example, some century-old family businesses in Europe almost only raise funds through right issue to maintain family control over the company.
Goheal has also assisted companies in raising merger and acquisition funds through right issue in past M&A projects to ensure that they do not lose their voice in management while expanding. However, right issue has extremely high requirements on market conditions and shareholder confidence. If the company's stock price is sluggish and shareholders are unwilling to pay to participate, it may lead to the failure of right issue and even affect the stock price in the secondary market.
Beware of pitfalls: If the stock price is lower than the rights issue price for a long time, the market's willingness to subscribe is low, and the company may face the embarrassment of "no one buying it". Therefore, when choosing rights issue, the company must have a clear capital story to prove to shareholders that the money can bring higher returns.
3. Issuing bonds: "Financial leverage" that does not dilute equity
Applicable scenarios: The company has a stable cash flow and a large financing demand, but does not want to dilute shareholders' equity
If the fixed increase is to introduce strategic partners and the rights issue is to mobilize old shareholders to make additional investments, then issuing bonds is another idea - borrowing money from the market. The advantage of bond financing is that it does not dilute equity, the financing amount is large, and the debt cost is predictable. As long as the company's profits are stable and it can repay the principal and interest on time, issuing bonds is a very flexible financing tool.
In the international market, many top companies are keen on issuing bonds for financing. For example, technology giants such as Apple and Tesla often raise funds by issuing corporate bonds to maintain global expansion. Goheal also found in M&A projects that many listed companies tend to issue M&A bonds to ensure that funds are in place quickly without affecting the holding structure.
Beware of pitfalls: If the company's debt is too high or its future profitability is uncertain, excessive debt issuance may bring a heavy financial burden and even trigger a debt crisis. For example, some real estate companies have borrowed a lot of money due to blind expansion, which eventually led to a break in the capital chain. Therefore, when considering issuing bonds, companies must have a clear repayment plan and strictly control the leverage ratio.
4. How to choose the best financing plan? Goheal gives you three suggestions!
Financing is not a "master key". Different companies and different development stages have different suitable financing methods. Goheal recommends that companies must consider the following three points before financing:
1) Financing goals: If it is to introduce industrial capital, a private placement may be the best choice; if the company's existing shareholders are willing to increase their stakes, a rights issue is more appropriate; if you do not want to dilute your equity and have a stable cash flow, issuing bonds may be the best choice.
2) Market environment: When the capital market is sluggish, equity financing (private placement, rights issue) may be difficult to attract investors, while debt financing (issuing bonds) may be more advantageous.
3) Shareholder structure and control: If the management of the company does not want its equity to be diluted, it should give priority to issuing bonds or rights issue, rather than issuing additional shares.
Goheal's team of M&A experts has accumulated rich experience in the global capital market and can tailor the best financing plan for the company to ensure that funds are efficiently in place and help the company take off!
Conclusion: The way to financing is accurate!
Capital operation is not "which financing method is better", but "which financing method is more suitable for the current company". What stage of development is your company in? Facing the market environment, has your financing strategy been adjusted? If you are the management of the company, would you choose additional shares, rights issue, or bond issue at this stage? Welcome to leave a message in the comment area to discuss, let us explore the best way of capital operation together!
[About Goheal] Goheal is a leading investment holding company focusing on global M&A holdings. It has been deeply involved in the three core business areas of acquisition of listed company control, M&A and reorganization of listed companies, and capital operation of listed companies. With its deep professional strength and rich experience, it provides enterprises with full life cycle services from M&A to reorganization to capital operation, aiming to maximize corporate value and achieve long-term benefit growth.
