How does an M A fund increase in value and what does an M A fund mean

Specialized M&A** has at least seven models in terms of profit models.

The first is the "capital reset" profit. M&A** can reduce corporate liabilities through capital injection, that is, to achieve a balance sheet reset, or capital structure adjustment.

The second is that the "asset restructuring" profit is 1+1 2 or 3-1 2. M&A** can participate in a series of activities such as asset sorting, divestiture, and new additions of the enterprise, forming a new and recognized asset portfolio for the enterprise, and then transferring it through mergers and acquisitions, so as to realize the benefits in this way.

The third is the "improved operation" method. In many cases, mergers and acquisitions do not simply rely on capital injection to achieve investment returns, but through guiding and participating in the daily operations of the invested enterprises, improving the operating performance of the enterprises and ultimately obtaining benefits.

Fourth, profit through "tax burden optimization". In general, the cost of debt before taxes is lower than the cost of equity; If the interest cost of the debt is also tax-free, then this in turn reduces the after-tax cost of debt.

Fifth, the "backdoor profit" method. At present, if you want to acquire the shell of a Hong Kong main board listed company, it has risen from HK$100 million or 200 million in previous years to HK$3 or 400 million**.

Sixth, the "process profit" method. Because any large-scale M&A case will involve "transaction structure design", which includes the payment method of the M&A transaction can be cash, share exchange, or payment treaty with the nature of "VAM"; The transaction structure design also includes the choice of financing instruments.

Seventh, the profit method of "company restructuring". This is a very Chinese characteristics of mergers and acquisitions profit method, that is, through the intervention of mergers and acquisitions, break the original "pure state-owned" or "pure family" corporate governance structure, through the establishment of a more scientific and reasonable board of directors, corporate governance system, incentive system, etc., from the source to change the behavior and corporate culture of the enterprise, in order to obtain better business performance returns.

Investment**. Generally speaking, investment is an investment tool that gathers the funds of many scattered investors and entrusts investment experts (such as managers) to carry out unified investment management according to their investment strategies and seek benefits for many investors. Investment**Pooling public funds, sharing investment profits and sharing risks is a collective investment method of benefit sharing and risk sharing.

And **investment** is to raise funds through the public issuance of ** units to the public, and use the funds for **investment. The holder of the unit has the right to ownership of assets, the right to distribute income, the right to dispose of residual property and other related rights, and bears corresponding obligations.

Schematic diagram of the operation process of investment**.

Investment** Operation Process:

1. Investor funds are pooled**;

2. The investment operation of the entrusted investment expert - the manager;

Among them, 1) the investor, the ** manager, and the ** custodian establish a trust agreement through the ** contract to establish the investor's capital contribution (and enjoyment.

There are benefits and risks), **The manager is entrusted with financial management, and the custodian is responsible for the custody of funds.

Relationship. 2) The manager and the custodian (mainly the bank) establish the responsibilities and rights of both parties through the custody agreement.

3 **The manager distributes the investment income to investors through professional financial management.

In China, the custodian must be a qualified commercial bank, and the manager must be a professional manager. Base.

Gold investors enjoy the income of **investment**, but also bear the risk of loss.

Contractual vs. Corporate.

Contractual is relative to corporate. According to the different organizational forms and legal status, there are basically two types of investment: contract type and company type.

Contract**:

Contractual **, also known as trust investment**, is an investment formed by issuing beneficiary certificates in accordance with the trust deed. This type of trust deed is generally entered into by the three parties of the manager, the custodian and the investor. The manager can act as the initiator of the trust to raise funds through the issuance of beneficiary certificates to form the trust property, and according to the trust deed, the custodian is responsible for keeping the trust property, specifically handling the trust property, cash management and related business, etc.; Investors are also the holders of beneficiary certificates, and participate in ** investment and enjoy investment benefits by purchasing beneficiary certificates.

The beneficiary certificate issued indicates the investor's interest in the investment.

M&A refers to the equity investment in the financial M&A investment in the enterprise, and the M&A investment in the stock equity of the enterprise in the form of equity purchase does not provide any funds for the enterprise, but is only an investment method of ownership transfer, and the old shareholders who transfer the equity of the enterprise are the funds obtained.

Extended information: M&A is to focus on the merger and acquisition of the target enterprise, and its investment method is to obtain control of the target enterprise through the acquisition of the equity of the target enterprise, and then reorganize and transform it to a certain extent, and then hold it for a certain period of time.

The difference between M&A and other types of investment is that venture capital mainly invests in entrepreneurial enterprises, and M&A** selects mature enterprises; Other private equity investments have no interest in corporate control, while M&A** is intended to gain control of the target company. M&A** is often found in MBOs and MBIs.

**Peculiarity. 1.In terms of fund raising, it is mainly raised from a small number of institutional investors or individuals through non-public means, and its sales and redemptions are carried out by the ** manager through private negotiation with investors.

In addition, the investment method is also carried out in the form of private placement, which rarely involves the operation of the public market, and generally does not need to disclose the details of the transaction.

2.Equity investment is mostly adopted, and debt investment is rarely involved. As a result, PE investment institutions have certain voting rights in the decision-making and management of the invested enterprises. reflected in investment vehicles.

3.Generally, it invests in private companies, that is, non-listed companies, and rarely invests in companies that have been publicly issued, and will not involve the obligation of tender offer.

4.It is more biased towards formed enterprises that have formed a certain scale and generate stable cash flow, which is obviously different from VC.

5.The investment period is longer, generally up to 3 to 5 years or longer, and it is a medium and long-term investment.

6.Liquidity is poor, and there is no ready-made market for equity sellers of non-listed companies to enter into deals directly with buyers.

7.Funds are extensive, such as wealthy individuals, ventures, leveraged mergers and acquisitions, strategic investors, pensions, insurance companies, etc.

8.PE investment institutions mostly adopt the limited partnership system, which has good investment management efficiency and avoids the disadvantages of double taxation.

9.Diversified investment and exit channels, including IPOs, trade sales, mergers and acquisitions (M&A), and buybacks by the management of the target company.

M&A** has the following benefits for listed companies: avoiding pre-merger risks, effectively saving funds, and improving M&A efficiency. M&A** has the following disadvantages for listed companies: strong supervision, excessive liquidity, insider trading risks, etc.

Company Law of the People's Republic of China

Article 120.

For the purposes of this Law, the term "listed company" refers to its shares listed and traded on the exchange.

Company Law of the People's Republic of China

Article 141.

The shares of the Company held by the promoters shall not be transferred within one year from the date of establishment of the Company. The shares issued before the company's public attack on the development bank shall not be transferred within one year from the date of listing and trading on the ** exchange.

Company Law of the People's Republic of China

Article 144.

The listed company shall be listed and traded in accordance with relevant laws, administrative regulations and exchange trading rules.

M&A** currently mostly occurs in mature markets, which is a high-end of private equity investment (PE), and is also the mainstream model of PE in mature markets in Europe and the United States. Different from angels and growth, M&A is mainly targeted at mature companies, while angels and growth are mainly invested in entrepreneurial companies; Traditional mergers and acquisitions aim to gain control of the target enterprise and seek management rights over the enterprise, while angels and growth companies exist in the form of equity participation and are less involved in the daily operation and management of the enterprise.

The difference between mergers and acquisitions and other types of investment is that venture capital mainly invests in entrepreneurial enterprises, and mergers and acquisitions are selected by mature enterprises; Other private equity investments have no interest in corporate control, while M&A** is intended to gain control of the target company.

M&A is to focus on the merger and acquisition of the target enterprise, and its investment method is to obtain control of the target enterprise through the acquisition of the equity of the target enterprise, and then reorganize and transform it to a certain extent, and then hold it for a certain period of time.

1. What are the risks of mergers and acquisitions?

The first is the M&A decision, that is, whether you dare to buy or not. M&A must first have a clear goal, purpose and direction, and should not be bought for the sake of buying, which is very dangerous.

The second is transaction risk, to judge whether the enterprise is worth buying, whether it can be saved, if it is bought or not, it is also bankrupt, then there is no need to buy. This is a test of M&A model and technology, as well as due diligence.

Finally, there is the risk of post-merger management, and many people suffer in this area. Replacing the management of the acquired company is a certain death, and it is important to arrange incentives for it, as well as a test of technology.

Second, the establishment of mergers and acquisitions ** has a positive effect on listed companies.

1) Improve the company's strength and enhance the company's valuation. Industrial integration and mergers and acquisitions will inevitably enhance the strength of listed companies and expand the influence of listed companies. Due to the controllable risk of mergers and acquisitions and the clear expectation, the stock price will be relatively large, which will greatly increase the market value of listed companies.

2) Leveraged buyout, occupying the company's Shaosen let the rubber amount of funds. Acquisition through mergers and acquisitions is a leveraged buyout, the listed company only needs to pay a small part of the funds, and can pay according to the progress of the project, and the rest of the funds are raised by the merger and acquisition manager, and the target of the acquisition can be locked.

3) Make full use of the professional experience of investment institutions to avoid various M&A risks. In the process of M&A implementation, it can generally be divided into three types of risks:

the risk of mistakes in strategic decision-making prior to implementation; the risk of information asymmetry in implementation; Post-implementation integration is at risk.

PE institutions have advanced investment technology and a professional asset management team, and have rich experience in industry analysis, M&A target selection and value discovery. PE institutions have superb negotiation skills to ensure that the target company is acquired at the best time and with the most reasonable quality; The above-mentioned advantages of PE institutions can make up for the shortcomings of listed companies in the implementation of mergers and acquisitions and avoid most of the risks of mergers and acquisitions.

After the merger and acquisition, the overall target enterprise becomes an affirmative or relative holding enterprise of the listed enterprise. The key point of M&A of investment holding enterprises is that the company must invest in the overall target enterprise project during the M&A, so as to achieve the goal of the overall target enterprise of the investment control and investment. Mergers, separations, joint ventures and other changes in usufruct are key ways for enterprises to redeploy resources and implement development strategies.

A merger is an asset reorganization, which refers to two or more separate companies, and the merger of enterprises constitutes a company, which is generally digested and absorbed by one or several enterprises by one dominant enterprise.

You should receive an agreement to acquire another business, bid on a business process that has already been sold, or engage with a friend for the use value of a sale**. M&A has become a worldwide situation.

In Europe, M&A activities continued to rise due to overproduction and currency harmonization. Fierce competition in the market and anxiety about foreign companies rushing to buy companies in the country for a limited time, and M&A themed activities have also increased. Nowadays, many transactions are all overseas transactions, which are either conducive to enterprises entering new sales markets, or promote enterprises to carry out international industrial chain integration.

Legal analysis: M&A is to focus on the merger and acquisition of the target enterprise, and its investment method is to obtain control of the target enterprise by acquiring the equity of the target enterprise, and then reorganize and transform it to a certain extent, and then hold it for a certain period of time; M&A** is exited by a listed company.

Legal basis: **Investment Law of the People's Republic of China》 Article 94 After the completion of the non-public offering** raising, the ** manager shall file with the ** industry association. If the total amount of funds raised or the number of people in the state of travel of the share holders meet the prescribed standards, the industry association shall report to the ***** supervision and management authority.

The investment of non-publicly offered **property**, including the purchase and sale of publicly issued shares****** bonds, shares of the old balance, and other ** and its derivatives stipulated by the ***** regulatory authority.