"Haste makes waste, and small profits lead to failure." The capital market has always been a contest of endurance and speed. When a company is acquired, the new controlling party often faces a difficult choice: to pursue short-term performance and quickly realize profits, or to adhere to long-term value and steadily shape the future of the company? Some people choose to cut costs, lay off employees, speed up business realization, and quickly improve report data; others tend to take steady steps and invest more resources in technology research and development and brand building in order to achieve greater growth in the future.
American Goheal M&A Group
Goheal, who has been active in the global M&A market for many years, observed that the success or failure of controlling stake acquisitions often depends on how the acquirer handles the balance between short-term performance and long-term value. If you act too hastily, it may damage the foundation of the company; but if you move too slowly, the market's patience is often limited. How to grasp this delicate scale?
The speed and slowness of capital: two paths of controlling stake acquisition
The acquisition of controlling stake is essentially a "relay race" in the capital market. After the new controlling party takes over, it not only has to face the performance expectations of shareholders, but also has to deal with many complex factors such as market fluctuations, employee trust, and competitive landscape. Generally speaking, the strategies of the acquirer can be roughly divided into two categories: short-term profit-oriented and long-term value-building.
Short-term profit-oriented: quick battle and quick decision, capital realization
The core logic of this approach is to quickly optimize financial statements, increase market value, and let investors see the "report card" as soon as possible. Typical operations include:
1. Cut non-core businesses and increase profit margins. For example, after a European fast-moving consumer goods brand was acquired in 2024, the new shareholder decisively cut off the product line with low profitability, and short-term profits soared, but market share began to shrink.
2. Adjust the capital structure and improve shareholder returns. For example, after some private equity funds acquired listed companies, they quickly increased shareholder returns through dividends, share repurchases, etc., and drove up stock prices.
3. Mergers and acquisitions to improve valuations. For example, some companies quickly expanded their scale and enhanced their market position through horizontal mergers and acquisitions to attract more capital attention.
Long-term value shaping: Steady and steady, building a moat
Different from the short-term profit orientation, the long-term value strategy emphasizes the sustainable development of the company. The core operations include:
1. Increase R&D investment and promote product innovation. For example, Tesla continued to lose money in the early stage, but insisted on technology research and development, and eventually became the global leader in electric vehicles.
2. Optimize corporate culture and enhance brand influence. For example, after a luxury group acquired a century-old Italian leather brand in 2023, it did not immediately adjust the business structure, but deepened the brand positioning, so that it ushered in explosive growth in the high-end market three years later.
3. Layout the global market and enhance risk resistance. For example, after a Chinese technology company acquired an overseas semiconductor manufacturer, it spent several years reshaping the supply chain and finally gained a foothold in the global market.
Goheal's data shows that more than 70% of successful controlling stake acquisition cases ultimately chose a balanced strategy that takes into account both short-term benefits and long-term value, that is, "stabilize the short term first, and then gradually amplify the long-term value."
Short-term performance VS long-term value: What is the key to balance?
1. Control the rhythm and avoid "too fast" or "too slow"
After the new controlling party takes over, the market usually expects short-term performance improvement. However, if the excessive pursuit of short-term benefits, such as large-scale layoffs and reduction of R&D, may lead to a decline in core competitiveness and ultimately damage long-term value. On the contrary, if there is no substantial return for a long time, investors will lose patience. The key is to grasp the rhythm, release the benefits appropriately, and pave the way for long-term development.
2. Capital operation and industrial integration in parallel
Many acquirers will adopt the "capital + industry" dual-wheel drive model. For example, in a certain acquisition of controlling rights, Goheal first stabilized cash flow through financial optimization and increased technology investment to win market confidence and shareholder support. The recognition of the capital market often determines the game space of the controlling party, while industrial integration determines the sustainability of the enterprise.
3. Transparent communication and win market trust
After the acquisition is completed, investors, customers, and employees will pay attention to the future direction of the company. If the controlling party does not have a clear strategic plan, the market is prone to panic. For example, after a US-funded fund acquired a Chinese technology company, it delayed disclosing its future development strategy, causing the stock price to plummet. In the end, it had to temporarily adjust its strategy and re-release favorable information. A clear vision and timely information disclosure are often the key to market trust.
The ultimate test of a successful acquisition: Who can keep the friend of time?
There is a classic saying in the capital market: "Time is the best friend." Any successful acquisition ultimately competes on who can find the best solution between market pressure and corporate development. Short-term performance and long-term value are not opposites, but mutually reinforcing. If short-term gains can pave the way for long-term development, then this will be a win-win capital operation; but if short-term strategies damage long-term value, then this will be a transaction eliminated by time.
Goheal has long been paying attention to global controlling stake acquisition cases and found that the most successful investors often have the ability to "win in stability", which can not only meet the market's expectations for short-term gains, but also firmly implement long-term strategies. After all, the capital market has never been a sprint, but a marathon full of variables.
So, what do you think? If you are an entrepreneur, would you prefer short-term gains or long-term value? As an investor, how would you judge whether a company's acquisition is worth paying attention to? Welcome to leave a message in the comment area, let us discuss the future direction of the capital market together!
Goheal Group
【About Goheal】Goheal is a leading investment holding company focusing on global mergers and acquisitions, focusing on the three core business areas of listed company control acquisition, listed company mergers and acquisitions and restructuring, and listed company capital operation. With its deep professional strength and rich experience, it provides enterprises with full life cycle services from mergers and acquisitions to restructuring and capital operation, aiming to maximize corporate value and achieve long-term benefit growth.
