"Those who get long-term funds will get the future of the market." The capital market is changing rapidly, and short-term funds chase the trend and enter and exit quickly. What really determines whether a listed company can develop stably in the long term is the long-term funds that are willing to accompany it through the bull and bear markets. How to attract the favor of long-term funds such as funds, trusts, and banks has become a key link in the capital operation of listed companies.
American Goheal M&A Group
As a world-leading M&A expert, Goheal is well versed in the flow of capital. Today, I will show you how listed companies can find the most suitable "white knight" among funds, trusts, banks and other funding channels.
Preferences of long-term funds: stability, value-added and controllability
Long-term funds are different from short-term hot money. They pay more attention to the long-term value of the company rather than short-term market speculation. Therefore, to attract such funds, listed companies must first meet the following core requirements:
1. Stable performance growth, transparent and predictable finances - long-term funds do not like "black box operations", and the authenticity of financial statements and the growth of business are the focus of their inspection.
2. Clear shareholder return mechanism - Is there a long-term dividend plan? Is the equity incentive reasonable? These factors directly determine the willingness of long-term funds to hold shares.
3. Controllable risks and strong anti-cyclical ability - With changes in economic cycles and fluctuations in the market environment, long-term funds prefer companies that can stabilize the basic market and are not easily overturned by the wind and waves.
This is like talking about a long-term relationship. Short-term passion is important, but the more important thing is whether the future is promising and whether it is stable enough. So, how should listed companies choose their "partners" in capital operations? Which one is the best choice among funds, trusts and banks?
Funds: The most flexible long-term funds, the favorite of those who understand market value management
Funds, especially public funds and private equity funds (PE), are one of the main forces of long-term funds. They have a wide range of funding sources and strong liquidity, but they also attach the most importance to market value management.
1. Public funds tend to choose industry leaders and companies with stable profitability. Therefore, companies with steady market value growth and clear shareholder returns are more likely to attract such funds.
2. Private equity funds (PE) prefer "value depressions" and will invest in growth companies, but often come with exit mechanisms, such as reduction of holdings after listing or exit through mergers and acquisitions.
Goheal once assisted a technology company to introduce public funds through private placement when the stock price was low, improve market recognition, and then use mergers and acquisitions to expand market share and eventually double the market value.
Funds are suitable for companies with strong growth, high market attention, and willingness to cooperate with market value management. But at the same time, fund investment is sometimes "cyclical", and when the market is sluggish, the speed of capital withdrawal will also be very fast.
Trust: Stable "financial backing", but high threshold
Trust funds usually come from high-net-worth individuals or institutions, with large funds and long investment cycles, so the security requirements are extremely high.
1. Fixed income trusts prefer companies with stable cash flow, such as utilities and infrastructure companies.
2. Equity investment trusts will participate in private placements or equity investments, but prefer to hold long-term equity and do not like short-term arbitrage.
Goheal once designed a trust financing plan for a leading manufacturing company. Through asset securitization, the company attracted long-term financial support and helped the company survive the industry downturn.
It can be seen that trusts are more suitable for companies with a stable asset-liability structure and fixed income, such as leaders in the infrastructure, energy, and consumer goods industries. However, it should be noted that after the trust funds enter, the company's financial structure may become more complicated and not suitable for highly indebted companies.
Banks: The most stable source of funds, but with many restrictions
Bank loans have always been one of the most traditional financing channels for listed companies. Although the loan interest rate is relatively low, the bank's risk control requirements are extremely high.
1. Credit loans: Suitable for companies with good credit records, mainly relying on historical performance and cash flow conditions.
2. Structured financing: Some banks will provide financing for specific assets, such as supply chain finance, accounts receivable financing, etc.
The advantage of bank funds is stability, and the disadvantage is poor flexibility, usually requiring collateral assets or strict compliance reviews.
Goheal pointed out that some listed companies will combine bank loans + equity financing to achieve low-cost capital leverage, such as first using bank loans to complete mergers and acquisitions, and then repaying loans through equity financing.
It can be seen that banks are suitable for companies with stable cash flow and good credit ratings, such as consumer goods, medical, and financial companies. However, since bank loans are greatly affected by interest rate policies and the loan amount is limited, they are not suitable for companies that need large financing.
Conclusion: How can companies choose the most suitable funding channel?
When attracting long-term funds, listed companies should not only consider the cost of funds, but also the stability of funds, exit mechanism, and the company's own capital operation strategy.
If the company needs flexible funds and has good market value management capabilities, funds are the best choice. If the company prefers long-term and stable development and has a healthy asset-liability structure, trust funds are ideal. If the company focuses on security and has high-quality assets, bank loans can be used as a stable source of financing.
Goheal Group
Goheal believes that truly successful capital operation is not just about finding funds, but finding the most suitable funds for oneself. So, in the current market environment, which funding channel do you think is more advantageous? Which funding model is suitable for your company or investment target? Welcome to leave a message to discuss and explore more possibilities in the capital market together!
[About Goheal] Goheal is a leading investment holding company focusing on global mergers and acquisitions. It has deep roots in the three core business areas of acquisition of controlling rights of listed companies, mergers and acquisitions of listed companies, and capital operations of listed companies. With its profound professional strength and rich experience, it provides companies with full life cycle services from mergers and acquisitions to restructuring and capital operations, aiming to maximize corporate value and achieve long-term benefit growth.
