The author believes that the most difficult problem is integration.

First, the general concept of enterprise mergers and acquisitions

Enterprise M&A integration refers to the adjustment and transformation of the human resources, organizational structure, corporate culture, strategic management, etc., which are jointly adopted by the acquirer and the acquired party in order to achieve the M&A target. Mainly involved: (1) corporate culture integration; (2) business strategy integration; (3) financial integration; (4) human resources integration.

According to a global M&A research report, the probability of failure at different stages of M&A is very different, 30% and 17% respectively before and during mergers and acquisitions, and the probability of failure in the post-merger integration phase is high. 53%. It can be seen that many M&A transactions did not really create value in the end. The reason is the failure of integration after mergers and acquisitions, and this part of the work is precisely a very weak link in our M&A practice.

Second, the current construction machinery industry debt-to-equity integration, has its own characteristics

In the current form of debt-to-equity swaps, capital injections for agents are a no-brainer for most manufacturers. Re-finding new agents to start a new stove is not necessarily better than it is now. The market risk is too great, and the existing claims may immediately become bad debts and cannot be resolved. However, this kind of capital integration that has not been brewed by both parties for a long time and lacks the strong will of both parties may not be adequately prepared.

1. The manufacturer does not have enough experience. How to integrate the agents requires long-term exploration.

No one thought that the red fire scene of the year was in exchange for today’s amazing debt circle. Manufacturers are using a variety of different forms to fight the fire, the lips and teeth are dependent, the agent is down, and the manufacturer's days are absolutely impossible. But in the way of saving, the debt-to-equity swap is the most unfamiliar.

For a long time, the agency sales model of the construction machinery industry has occupied an absolute market share. Most manufacturers never think of becoming a shareholder of the agent in the future, and directly intervene in the sales market. For the merger and acquisition side, there is not only a suitable talent reserve, a lack of corresponding management talents, but also a serious shortage of awareness and experience for the integrated agents.

2. Agents have not formed a consistent strategic identity in mergers and acquisitions, and there is no psychological preparation for their own influence on business operations in the future.

In contrast, agents selling part of the equity, but forced to helpless, may be for the agent's heart, debt-for-equity is only an expedient measure, and they are not aware of the fundamental changes that may occur, especially for the future company Agents have not been psychologically prepared for decision-making operations, adjustment of internal governance structures, and regulation of financial behavior.

3. Manufacturers have limited influence in participating in decision management as small and medium shareholders

Manufacturers enter as small and medium-sized shareholders, and change the strength of the past factory bosses. According to the rules of the majority decision of capital, manufacturers can only participate in the company's decision-making management in a limited way, sometimes even just a bystander.

Third, where is the debt-to-equity integration agent difficult?

1. Difficulties in the general management of agents are not standardized, manufacturers need to do long-term long-term operational coordination preparation

Many agents started from self-employed individuals. Some shareholders have a single structure, which is both the chairman and the general manager. The ownership management rights are integrated, the internal management is arbitrary, the financial management is complicated, and the voucher management is chaotic. From the internal management level, fundamentally Can not be compared with the manufacturer. For the manufacturer, the obvious obstacle to entering the agent is the situation that the foundation is thin and the task is heavy.

2. Difficulty in cultural integration

Corporate culture is the embodiment of soft power and the most critical area of ​​integration. Corporate culture is actually the business philosophy of the company, the way people live, the habits of behavior and the atmosphere of employees. The integration of enterprises will inevitably encounter conflicts and contradictions between cultures, and if cultural integration is not possible, it will affect the future. longterm development.

3. Difficult to sort out the company's financial data

According to the past service experience of Zhongde DexinTM, the financial data of the agent is always in a state of constant reconciliation. Once the historical financial data is presented to the new shareholders (manufacturers), this may be the agent's most Unwilling to accept the reality. At the same time, if it is to constrain the company's operations through a standardized financial system, it will be an insurmountable difficulty.

4. Difficulties in controlling the company’s business practices

It is also a difficult problem to supervise and control the company's improper related transactions. Under normal circumstances, the small and medium-sized shareholders are slightly ignorant, and it is difficult to find and stop the improper related transactions of the controlling shareholders.

Fourth, the author's practical advice on integration

According to the author's long-term experience in non-litigation legal services, combined with the characteristics of the construction machinery industry, the construction machinery manufacturer's debt-to-equity integration agent work, put forward the following recommendations:

1. Put down the manufacturer's boss and integrate into the agent's corporate culture

The author has consistently advocated that in order to fundamentally change the goal, the soil must be rooted in the goal. Some agents are old enterprises that have been operating for several years and more than ten years. They must have deep-rooted behavior patterns and thinking habits. As a merger and acquisition party, they must adhere to the gradual integration, integration, and transformation, and must not be in the same place. The mentality, in the behavior pattern of the controlling shareholder, rashly and drastically changed without any cultural integration.

2. It is most important to formulate a sound and reasonable company charter and to sort out the corporate governance awareness.

The company's articles of association are the company's constitution. He is the legal document that binds the company's shareholders, directors, supervisors, senior executives and other relevant business managers, and has the highest legal effect for the company. Through the stipulation of the articles of association, the manufacturer's right to know, the right to know, the cumulative voting rights, and the share repurchase rights can be clarified, and the agreed provisions are operable, evaluable, and enforceable, so that the manufacturer can be surely guaranteed as the minority shareholder. The basic rights and interests lay the framework and institutional basic conditions for the integration of agents.

3. Establish a debt-to-equity working group to form the working mode of both the M&A and professional third-party service agencies

As mentioned above, for manufacturers and agents, the cooperation pattern after debt-for-equity swap is definitely a brand-new cooperation model, from due diligence, reasonable valuation, agreed trading procedures, registration, to the company legal person involved in the integration. The construction of the governance structure, the duties and obligations between shareholders, directors, supervisors and senior management, the rules of procedure of the company, the accountability of misconduct, etc., all need an independent working group to carry out the lead implementation. In areas involving majors, professional third-party organizations must participate in the organization.

4. Engage third-party experts as independent directors to provide external coordination and supervision conditions for the integration of the two parties and future smooth cooperation.

In view of the particularity of existence and the degree of cognition between the two parties, the author strongly recommends that the new company shareholders' meeting after the debt-to-equity swap should hire independent professional third-party experts to serve as independent directors of the new company. Independent directors perform their duties independently, and are familiar with the company law and the company's articles of association. In particular, they will pay attention to the rights and interests of small and medium-sized shareholders, which is very beneficial to the protection of manufacturers' rights and interests in new companies and to help promote the integration and influence of manufacturers on agents.

According to the authoritative data of McKinsey & Company, the general expansion of the company and the positive development of the company accounted for only 20% to 30% of the total mergers and acquisitions. The reason for the high M&A failure rate is mainly to ignore the post-merger management. Integration issues. In the current construction machinery industry, due to the situation, the debt-converting stocks that are gradually being paid attention to, the integration problem is more easily overlooked and far underestimates the difficulty.