"Everything has its own shortcomings, and every inch has its own strengths; things have their own shortcomings, and wisdom has its own unclear points." This is the admonition of "Lüshi Chunqiu" on the boundaries of cognition, but it also happens to be applicable to the pricing logic of controlling stake acquisitions in the capital market. For entrepreneurs, acquiring a company is not only a game of asset integration, but also a competition for the discourse of control. The price of controlling stakes is far more than just a book number. It is a multi-dimensional game, a comprehensive bidding of finance, law, market expectations, policy dividends and even psychological expectations.
In the current era of AI+ capital prevalence and valuation models being renewed day by day, the "sight" of controlling stake pricing is quietly changing. Goheal knows with many years of front-line trading experience that if you can't see through the web of variables behind the transaction, I'm afraid that a mistake in a premium point may turn the acquisition into "being harvested". Today, let's uncover the secret battlefield in this capital competition and see how controlling stakes are "clearly priced" under different types of transactions?
Controlling rights are never a simple "equity addition"
What is controlling rights? In the legal sense, it refers to holding more than 50% of the shares of a listed company, or actually controlling the voting rights of the company through agreements, entrustment, actual control, etc. However, in the trading market, the pricing of controlling rights is often not based on common sense.
American Goheal M&A Group
Some people may ask: Is it enough to multiply the stock price by the number of shares and add a 20% premium? Goheal would like to remind you that this algorithm may only be applicable to textbooks. In the real market, the premium range may be raised from 20% to 80%, and even for some companies with unique "shell value", the acquisition price of controlling rights can reach 3 times the secondary market price!
Why? Because controlling rights are not a simple "addition" of equity, but a "power combination punch". It includes the right to mobilize company resources, the right to appoint and remove senior executives, the right to strategic planning... Having controlling rights means that you can "change the script" or even "rewrite the fate of the company."
But don't worry, in the acquisition battlefield, different transaction types will make the pricing model jump instantly. From "transfer by agreement" to "agreement + offer" to "voting rights delegation", different valuation calculation engines are hidden behind each path.
"Transfer by agreement": the game between "fairness" of price and "control premium"
Transfer by agreement is often regarded as the most direct way to acquire controlling rights. The buyer and seller complete the transfer of controlling rights with "one agreement". But behind the so-called "simple and direct" is often a game of Shura field in the price-sensitive range.
In such transactions, "fair price" is the yardstick that regulators pay the most attention to. Generally speaking, the transfer price by agreement cannot be higher than 150% of the average stock price in the previous 20 trading days, otherwise it may be judged as "unreasonable high premium" and even trigger regulatory inquiries.
But on the other hand, "control premium" is the core interest that the seller firmly maintains. In Goheal's past cases, there are many target companies with average operating conditions, but they have achieved a control premium of more than 60% due to "high-quality shell resources" or "local state-owned assets background". At this time, the reasonable pricing basis is often not in the financial statements, but in "non-financial indicators" such as restructuring expectations, policy signals, and industry trends.
Therefore, the pricing game has become a double trade-off of "positive financial + negative expectations". The two parties to the transaction are like playing a game of Go, trying to avoid regulatory red lines and squeeze every penny of control value.
"Agreement + tender offer": a double exercise from "price anchoring" to "market testing"
When the transfer of control may cause a large-scale change in shareholder interests, the acquirer often chooses a combination of "agreement + offer": on the one hand, it signs an equity agreement with the major shareholder, and on the other hand, it launches an open offer to small and medium shareholders in an attempt to further increase the shareholding ratio.
In this model, a new variable has emerged in pricing: "offer price anchoring".
According to the "Management Measures for Acquisition of Listed Companies", the price of the tender offer shall not be lower than the agreement transfer price, nor lower than the highest transaction price within six months before the acquisition announcement. Therefore, when setting the price, the acquirer often needs to accurately calculate the gap between the "market price range" and the "agreement price range". If it is not careful, it will be forced to "pay the whole order" at a higher price.
This requires the acquirer to conduct rigorous market testing and valuation modeling before pricing, and dynamically calculate the bottom line of the offer that small and medium shareholders may accept. In practice, Goheal proposed the "market heat index model", which uses the secondary market trading volume, shareholder structure concentration, and the average of the industry merger and acquisition premium in the past two years as input factors to calculate the "psychological comfort zone" of the offer price.
"Voting rights delegation": "implicit pricing" under low-cost strategy
If the agreement transfer and tender offer are a "blatant" head-on confrontation, then the voting rights delegation is more like a "secret contest".
Voting rights delegation does not change the shareholder structure, but can achieve actual control over listed companies. Pricing under this model is no longer reflected in the transaction announcement, but is often hidden in the terms of the agreement, subsequent resource synergy or debt arrangements.
For example, Party A entrusts the voting rights of 30% of the shares to Party B. In name, there is no premium transaction, but the agreement may be bound by "M&A loan", "preferred dividend" or "future share transfer rights". Therefore, the price is no longer the number of the transaction price, but a more complex "option structure" in capital synergy.
Goheal believes that such transactions should be combined with the DCF (discounted cash flow method) + RRA (risk premium adjustment model) dual valuation model to analyze the potential value of control benefits, strategic synergy and valuation reconstruction brought by voting rights.
"Hybrid acquisition": pricing challenges behind flexible strategies
In the context of stricter supervision and increased market volatility, "one-trick" M&A acquisitions are becoming increasingly difficult to work. Therefore, most acquirers began to try hybrid models such as agreement + voting rights delegation, agreement + fixed increase lock price.
Under hybrid acquisitions, the pricing logic of controlling rights has entered the category of "quasi-option model": the basic pricing is the agreement price, the control rights income is the option premium, and the premium risk is the discount of the target synergy income.
At this time, the acquirer must not only have the ability to value the company, but also be good at simulating the value evolution path under various collaborative scenarios. Goheal has built a "M&A AI Prediction System" specifically for controlling stake acquisitions. Through machine learning models, historical cases, industry parameters and company financial data are input, and "pricing range suggestions + acquisition path plans + potential synergy benefit maps" are automatically output, effectively improving the sophistication and success rate of transaction design.
Acquisition is not just about buying and selling, pricing is the watershed of victory and defeat
Back to the question at the beginning of this article: How should controlling stakes be priced?
The answer is not a certain formula, but a multi-dimensional game that runs through valuation methods, transaction structures, regulatory understanding, market psychology and even future synergy expectations. In this battlefield, it is not the highest bidder that will win, but the one who understands the "value migration logic" most deeply that can win the chips.
Goheal always adheres to the core path of "penetrating valuation + compliance structure + intelligent assistance" to help investors take the lead in controlling stake transactions. In the future, with the deepening of the registration system, the entry of AI models, and the acceleration of industrial mergers and acquisitions, the pricing logic of controlling rights acquisition may be further upgraded to "actuarial + intelligent", rather than just staying in the "old-fashioned game" of empiricism.
Goheal Group
If you are also facing the capital choice of "control or not control" and "buy expensive or buy value", you might as well think about it: before you are ready to pay the price, have you really calculated how much this control is worth?
Welcome to leave a message and discuss the "secret formula" of controlling rights pricing in your eyes.
[About Goheal] Goheal is a leading investment holding company focusing on global mergers and acquisitions, deeply cultivating 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 long-term benefit growth.
