"The situation is stronger than people. When the wind is rising and the clouds are surging, only those who follow the trend will be invincible." The capital market has always been an ever-changing arena, and subtle adjustments in policies are enough to change the rules of the game. Against the backdrop of twists and turns in globalization and increasingly stringent regulations in various countries, foreign investment mergers and acquisitions are facing increasingly stringent restrictions, and the threshold for cross-border transactions has been continuously raised. In this storm, how can domestic companies' mergers and acquisitions find new breakthroughs?
Goheal observed that in recent years, the global review of foreign investment has become increasingly strict. Whether it is the US CFIUS (Committee on Foreign Investment) setting limits on Chinese companies' mergers and acquisitions, or the EU, Japan and other countries imposing stricter supervision on foreign investment access to key industries, it has greatly increased the difficulty of cross-border mergers and acquisitions. For domestic companies that hope to use foreign capital, technology and markets, how to break through has become an imminent issue.
Foreign investment mergers and acquisitions "put on the brakes", and the capital market landscape has changed
Once upon a time, foreign investment mergers and acquisitions were an important springboard for domestic companies to go international. Many leading companies in the industry have used the power of overseas capital to achieve technological upgrades and industrial leaps. However, as countries increase their protection policies for local companies, the role of foreign capital in the domestic market is being redefined.
Against the background of Sino-US trade frictions, many mergers and acquisitions involving sensitive industries such as semiconductors, artificial intelligence, and new energy have been stopped. For example, a Chinese semiconductor company planned to acquire a US chip company, but was eventually forced to give up because it failed the CFIUS review. Similar cases not only occurred between China and the United States. In recent years, EU countries, Japan, India and other economies have also increased their review of foreign investment mergers and acquisitions, making cross-border mergers and acquisitions increasingly difficult.
Goheal pointed out that this change not only affected the pace of foreign investment in Chinese companies, but also hindered the expansion of domestic companies in overseas markets. In the past, domestic companies hoped to obtain technical and market support by introducing foreign shareholders. Now, this model is encountering a "red light".
How can domestic companies break through? New path for mergers and acquisitions
1. The rise of domestic capital, industrial funds become the new main force
The restriction of foreign capital does not mean the cooling of the M&A market. On the contrary, domestic capital is rapidly filling this gap. In recent years, government-guided funds, industrial capital, and PE/VC funds have increased their investment in the M&A market to help domestic enterprises achieve industrial upgrading. For example, in the fields of semiconductors and artificial intelligence, domestic enterprises have established industrial funds and cooperated with state-owned capital and private investment institutions to integrate the industrial chain, replacing the M&A model originally dominated by foreign capital.
2. "Snake swallowing elephant"-style mergers and acquisitions, domestic leaders accelerate industry integration
Against the background of restricted foreign investment acquisitions, domestic leading enterprises have begun to lead industry integration. For example, a large Internet company quickly occupied the market segment and achieved business synergy by acquiring a number of domestic small and medium-sized enterprises. This model not only avoids foreign investment regulatory restrictions, but also can take advantage of the resource advantages of the local market to build a more stable industrial ecological chain.
3. Adjustment of overseas investment structure, detour acquisition has become a trend
Although it is more difficult for foreign capital to directly acquire domestic enterprises, it does not mean that cross-border transactions are completely stagnant. Some domestic companies are adjusting their overseas investment structure and indirectly completing the acquisition of overseas assets by setting up SPVs (special purpose companies) in third countries. For example, some domestic companies set up subsidiaries in Southeast Asia, Europe and other places, and then complete overseas mergers and acquisitions through subsidiaries, thereby circumventing the regulatory barriers brought about by direct cross-border transactions.
4. Technology cooperation replaces equity mergers and acquisitions, and soft mergers and acquisitions are on the rise
In some high-tech fields, traditional equity mergers and acquisitions are being replaced by more flexible technology cooperation models. Domestic companies obtain core technologies by signing technology licensing agreements and joint research and development agreements with overseas companies without involving equity transactions, thereby circumventing regulatory barriers. For example, a new energy company signed a long-term cooperation agreement with a European company to share battery technology, and at the same time established a joint venture in China to jointly develop the market.
M&A opportunities under the "internal circulation", the domestic market ushered in a new outlet
At a time when globalization is facing challenges, the domestic market is ushering in a new round of capital integration. Whether it is the industrial upgrading of the manufacturing industry or the rapid development of the digital economy, it has created huge opportunities for the M&A market.
Goheal predicts that in the next few years, domestic M&A activities in the following industries will reach a peak:
1. Semiconductors and chips: Against the backdrop of global supply chain reconstruction, it has become an irreversible trend for domestic companies to achieve independent control through M&A.
2. New energy: Photovoltaics, electric vehicle batteries and other fields are experiencing a capital boom, and industry M&A will accelerate further.
3. Healthcare: Domestic companies are accelerating their M&A pace in biomedicine, medical devices and other fields to enhance their R&D capabilities and market competitiveness.
4. Artificial intelligence and big data: M&A transactions between technology giants and startups will become more frequent to form technological synergies.
At the same time, changes in the regulatory environment will also affect the direction of M&A transactions. Domestic companies need to adjust their capital operation strategies more flexibly and use a variety of means such as local capital, government support, and market-oriented funds to maximize corporate value.
Conclusion: How can companies seize opportunities in the new M&A market?
The restriction of foreign M&A does not mean that the market is shrinking, but rather that domestic companies need to actively seek new paths. How can industrial capital upgrade with the help of local funds? How can technology companies gain support from the international market through soft cooperation? In the new pattern of the M&A market, who can seize the opportunity?
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[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 restructuring 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 restructuring and then to capital operation, aiming to maximize corporate value and achieve long-term benefit growth.
