Countless Lies About M&A in China, and One Truth

By Muxin Xu

Edited by Zhiyan Chen

There's a certain euphoria in the air. More and more people are shouting: "The M&A wave is here!" Yet other voices, more sober, speak of "the difficulty of M&A": the difficulty of finding targets, of finding buyers, of closing deals, of negotiating, of integrating operations. On one side, dreams; on the other, reality. But for China's business world, now entering an era of stock — not flow — M&A is an inevitable tide. So in 2024, dubbed by many the "first year of M&A," are the players actually ready? Over the past two months, Waves interviewed PE investors and intermediaries, attempting to parse this year's M&A market in a 10,000-word feature: Why do 80% of M&A deals fail? Where are the buyers, really? What kinds of companies want to — or can more easily — sell themselves? What can VC/PE firms holding stranded assets do in this process? And when will we truly see the spring of M&A?

Is the "M&A Wave" Actually Here?

Fact 1: A "False Prosperity" by Comparison

1. In the first half of 2024, China saw 362 M&A transactions, up over 70% year-on-year. But this apparent surge merely returned volumes to first-half 2022 levels.
2. The anomalous year of 2023 served as a "control group." In M&A markets, both deal value and frequency were effectively "halved" compared to two years prior. The bleakness stemmed from multiple converging factors: the post-pandemic recovery falling short of expectations, geopolitical tensions, global interest rates, and declines in equity and real estate markets. Chao Wang, founder of Blue Bridge Capital, told Waves: In 2023, he watched everyone start the year traveling frantically — even chartering flights for overseas due diligence — only to exhaust themselves with nothing to show for it, so by the second half they "all lay flat."
3. In China's market in recent years, nearly every year has been called "the first year of M&A." But looking at history, there have only been three concentrated M&A periods since the millennium. And since the mobile internet era, M&A has rarely featured in mainstream investment discourse:
   • The first came as China joined the WTO, when state-owned enterprises entered global competition and urgently needed reform. Classic cases include Newbridge Capital taking control of Shenzhen Development Bank, and Hony Capital consolidating China Glass.
   • The second involved foreign capital acquiring Chinese factories or domestic brands, with the Nanfu Battery acquisition as a representative case.
   • The third emerged after 2010, when M&A became more of a low-probability event — examples include Yingde Gases going private, Hillhouse Capital's acquisition of Belle International, and KKR's acquisition of China's NVC Lighting.
4. Two factors give 2024 a claim to being the "real first year of M&A": on one hand, policies like the "Six Measures for M&A" and "Nine National Articles" provide systematic support for market activity. On the other, the entire venture capital environment is shifting from an era of incremental growth to one of stock optimization — finding opportunity in existing assets has become mandatory coursework for nearly everyone.
5. Gang Li, partner at ECM Partners, told Waves that for a sector to see significant "M&A waves," several conditions must align: the industry needs to have experienced rapid growth and attracted substantial capital, and in the subsequent downturn, numerous M&A opportunities will inevitably emerge. This year's surge in biopharma M&A is one validation; which sector will be next?

Fact 2: The "Big Ones" That Need Separate Discussion

1. A key reason 2024 is called "the first year of M&A" is several high-profile large transactions. These include MINISO founder Guofu Ye acquiring 29.4% of Yonghui Supermarket for RMB 6.3 billion, and Genmab's $1.8 billion all-cash acquisition of ProfoundBio.
2. But these blockbuster deals are memorable precisely because they're scarce. Take ProfoundBio: in the first three quarters of 2024, the biopharma sector saw 30 transactions totaling RMB 27.838 billion, with ProfoundBio alone accounting for nearly half. The second-largest was Fosun Pharma's RMB 5 billion acquisition of Henlius. That means the remaining 28 transactions totaled less than RMB 10 billion — not even matching that single deal.
3. Q3 2024 primary market financing appeared to rebound strongly at RMB 224.1 billion, but this figure included several mega-deals: the RMB 60 billion financing of Dalian Xindameng, and the RMB 23 billion financing of Huawei's Yinwang Intelligent. Exclude these, and 900 companies split just RMB 19.1 billion among them.

Fact 3: M&A Exits? Too Many Monks, Too Little Porridge

1. Currently, VC/PE funds have 130,000 projects and 14,000 companies awaiting exit. In the first three quarters of 2024, 127 Chinese companies listed domestically or overseas — representing 0.9% of the backlog.
2. In 2023, of RMB 14 trillion in primary market stock, RMB 60.506 billion was recovered through M&A — 0.4% of the total.
3. According to PitchBook and Zero2IPO Research, in 2023, while M&A accounted for 95% of exits in the U.S., only 46% of Chinese exits were achieved through M&A. U.S. M&A fund-raising and investment accounted for 68% and 69% respectively; in China, these figures were merely 3% and 1%.

"'M&A wave' sounds seductive, but it's a lie."

No one stays young forever, except the first year of M&A.

The popularity of the "M&A wave" narrative is more a collection of hopes, even wishes. Investment institutions are wishing, because they need exits. Companies desperate to sell are wishing, because they want more buyers. Intermediaries are wishing, because any "wave" is a massive boon to their business model.

But M&A markets aren't the A-share market. The transaction amounts are enormous and processes complex, so irrational factors, emotions, and speculation cannot truly sway decisions.

Gang Li of ECM Partners told Waves: Looking across China's commercial development, 2024 is the first time we've seen so many assets awaiting exit. Currently, over 37,000 funds are in exit or extension periods, with RMB 15 trillion in scale — "the entire health industry is only RMB 10 trillion."

Yet IPOs have slowed at precisely this moment, compounded by global economic recession. Nearly everyone is frantically searching for an exit. Setting aside underwater methods like secondary sales and buybacks, there are really only two mainstream exit paths. With IPO no longer viable, naturally everyone is fixated on M&A.

But clearly, an M&A wave doesn't arrive just because people are staring hard enough.

Why M&A Is Hard, and Why Deals Fail

Fact 4: Price Disagreement Is the Core Factor

1. M&A transaction prices are declining: According to ChangLei Capital statistics, in A-share M&A transactions over the past two years, deals with post-merger valuations below RMB 500 million accounted for over 50%.
2. Valuation models have fundamentally changed: Currently, acquirers mostly price using PE (price-to-earnings) multiples — that is, multiples of the target's net profit, representing years to recoup investment. A 10x PE means 10 years to break even. The benchmark for listed company acquisitions is roughly 15x. In the internet era, acquirers almost exclusively used PS (price-to-sales, valuation/revenue). This was because many internet companies were loss-making during high-growth phases, but typically saw explosive growth after burning through capital — their value couldn't be measured by PE models.
3. The buyer-seller price gap didn't form overnight: Getting companies forged in the capital waves of the past decade to accept current M&A valuation frameworks is like the valuation inversion between primary and secondary markets in recent years. Bitter, hard to swallow.
4. An M&A failure over price: In August 2024, Kai Ni, founder of autonomous driving company Holomatic, acknowledged the failure of M&A restructuring talks with GAC Group. The core issue: GAC refused to follow Holomatic's RMB 3 billion valuation, instead slashing it to the hundreds of millions. Two years prior, GAC had led Holomatic's Series C+ round at precisely that valuation — hundreds of millions of RMB.
5. Selling at a loss: The bitter reality is that recent sellers haven't fetched prices comparable to their peaks. Jifeng Auto Parts sold its holding company "TMD" at an 80% discount, taking up to RMB 380 million in losses — selling at a loss has become consensus for many targets. 3Peak acquired Chipanalog for RMB 1.06 billion, while the latter's last-round valuation was RMB 1.31 billion. Such price gaps aren't unusual, but the Chipanalog deal was special: it used differentiated pricing and valuation schemes, with the gap absorbed by Chipanalog's management shareholders, ultimately achieving a win-win for all parties.
6. A bold add-on strategy: In 2021, Hygeia Medical acquired Suzhou Yongding Hospital, backed by Warburg Pincus. Several buyers had eyed the target but offered mediocre prices; Warburg Pincus indicated they'd match. Hygeia ultimately acquired Yongding, and its stock price surged over fourfold at peak. Warburg Pincus successfully exited. This is one of the rare M&A cases where buyer, seller, and financial investor were all satisfied.

Fact 5: Objective Obstacles Remain Numerous

1. Policies are still en route

Previously, policy restrictions weighed heavily on listed companies and private equity firms alike. Private funds were barred from participating in M&A involving listed companies; listed companies could not acquire businesses outside their sector, nor acquire loss-making firms, and so on. But this year, a steady stream of M&A policies has emerged — the Shanghai Equity 32 Measures, the New Capital Market Nine Measures, the Venture Capital 17 Measures, and the M&A Six Measures, among others. Yet among those we interviewed, most said that while the policy rollout is welcome, a gap remains between policy and actual M&A execution. "Don't watch what's announced, watch what lands — especially wait for the CSRC's window guidance" was the cautious consensus.

Meanwhile, banks have begun adjusting their traditional credit approach to M&A loans, exploring structures better aligned with market demand. Tong Yu, General Manager of Yicun Capital, told Anyong Waves that banks still focus primarily on the target's cash flow, dividends, and interest coverage. While this model delivers strong risk control, it leaves room for optimization given the increasingly complex and diverse demands of the M&A market. Some banks have already begun moderately relaxing cash flow and debt service requirements based on companies' actual circumstances, creating more possibilities for M&A activity to advance.

2. Chinese Founders' "IPO Complex"

Founders' protective attachment to their companies — what might be called a "cub-guarding instinct" — is another factor dampening willingness to sell. In Wang Chao's observation at Lanqiao Capital, Chinese entrepreneurs prize IPOs far more than their American counterparts, who are more accepting of selling out and will cash out at the first opportunity rather than continue grinding. This also reflects the fact that American VCs place greater value on the ability to "sell the company."

Zhang Xinzhao, Founding Partner of Genesis Capital, uses the term "entrusting an orphan" to describe the mindset of founders accepting acquisition. Hence buyers in the Buffett mold pay particular attention to maintaining their reputations day-to-day — to prove to sellers when the time comes: I will treat your company well.

In 2006, Huang Guangyu approached Zhang Jindong proposing to acquire Suning. Zhang shot back: "I'm not selling, and you can't afford it anyway. If I can't beat you, I'll give it to you — no need for you to buy." Zhang's words captured how many entrepreneurs think: selling out equals failure; going public is the perfect ending.

3. A Shortage of Seasoned Domestic Buyout Funds

The M&A failure rate is 80%. According to Hu Xiaoling, Founding Partner of CDH Investments, this 80% refers to failures after money has actually changed hands — not including the "failure rate" of hoped-for deals that never closed.

We discussed in our article Buyout in China that, unlike equity investment teams that have gradually matured alongside rapidly accumulated wealth, there are no more than 50 people in all of China with mature M&A leadership experience. This includes "M&A queen" Liu Xiaodan, Zhang Yong (Xiaoyaozi) who joined Firstred Capital, Hillhouse Capital, CDH, and Yicun, which executed the take-private and relisting of "shoe king" Belle. But compared to the countless names in equity investment, these experienced PE players keep a lower profile — like the "sweeping monk" of Demi-Gods and Semi-Devils.

The legend of foreign PEs shines brighter. In 2013, under the double blow of the melamine scandal and Chinese concept stock fraud scandals, Feihe's stock price collapsed. Morgan Stanley's RMB fund invested in 29% of Feihe Dairy at 7x P/E, helped it delist from the NYSE, then advised it to push into premium infant formula — leading to its relisting six years later. A 200 million RMB investment yielding 100x returns made Feihe Dairy the most profitable deal in Morgan Stanley's Asian PE fund history.

Shan Weijian, who acquired Korea's national bank during the Asian financial crisis, later led PAG to acquire Air Liquide's then-struggling China unit, Yingde Gases, at HK$6 per share — implementing a series of new measures that turned around its operations.

But in recent years, foreign PEs have been increasingly absent from China. Among top-tier PEs, only Advent International and Bain Capital closed deals this year — the latter acquiring stakes in two manufacturing companies.

"The fundamental difficulty of Chinese M&A is the difficulty of transformation."

The golden rule of M&A is: Every deal is the right deal at the right price. There are no unmakeable deals, only unmakeable prices. For many companies, price declines may be the inevitable result of the capital bubble inflated over the past decade-plus. After years of primary-secondary valuation inversions and blocked IPOs, for the mass of companies hoping to exit via M&A, whoever recognizes this first is most likely to close a deal.

The wildly divergent price expectations of buyers and sellers, the gulf between policy and actual implementation, founders' refusal to accept acquisition as an outcome, and the general inexperience of domestic PE — these are the direct causes of China's M&A difficulties. The root cause lies deeper: we are shifting from making money in incremental markets to making money in stock markets. Caught in the comma of an era, the turn is bound to be difficult.

Which Companies Are Moving Toward M&A?

Fact 6: Portfolio Companies Being Actively "Shopped" by Investors

1. For VC/PE firms, the desire to see their pending exits acquired is now nearly as strong as their willingness to invoke buyback clauses. To date, VC/PE funds have accumulated 130,000 projects awaiting exit, involving 14,000 companies. Under this exit pressure, buyback agreements were once seen as a lifeline — but according to reports, cases with 100% repayment and full execution account for just 0.27% of all buyback cases. And in 90% of all buyback cases, founders became defendants, with roughly 10% of founders becoming "dishonest persons subject to enforcement." Venture capitalists and founders who face each other in court agree on only one thing: by any means necessary, find a buyer to take the company off their hands.

2. One investor described to Anyong Waves a recent M&A networking event. The organizers gave green badges to buyers, orange badges to sellers. The result: an ocean of orange.

Fact 7: The Pool of Potential Sellers Is Structurally Expanding

1. Some Family Businesses Without a "Second Generation"

China's family businesses emerged in the 1990s. According to 2024 data from the New Fortune 500 Rich List, over 80% of top private entrepreneurs are now over 50. These entrepreneurs have reached the point of deciding on succession.

Yet willingness among the second generation to take over has declined year by year. In 2015, the China Family Business Succession Report showed 40% of second-generation members willing to succeed; three years later, that figure dropped to 20%. The mismatch between expectations for family development and personal planning is the most important reason. Family businesses founded in the 1990s mostly belong to traditional industries, now facing challenges amid economic transformation, while the second generation grew up during an era of rapid wealth growth — stories of making money stitch by stitch hold little appeal. For these traditional enterprises about to lose their heirs, finding a buyer who can continue operations may be a good option.

2. Waking Up from the IPO Dream

In early December 2024, Goodix Technology announced it would acquire Yunyinggu Technology, which had already launched A-share IPO plans and completed an F-round financing just three months prior at an 8.5 billion RMB valuation. Similarly, Lian Shi Technology, which terminated its STAR Market IPO in July 2024, decided to sell itself to Youon Technology — driven not only by IPO failure-induced "eagerness to sell" but also by the restoration of the controlling shareholder's buyback obligations.

With the IPO backlog still unrelieved, whoever wakes first from the dream of going public will gain first-mover advantage in M&A sales.

3. Certain Industries Have Developed Acquisition-Ready Targets

Beyond these two large categories of companies "struggling to sell," certain industries have, through years of development and practice, produced numerous attractive targets.

Li Gang of ECM told Anyong Waves that M&A in innovative drugs has been noticeably more active this year — "the inevitable result of the Chinese biotech industry's overall strength having improved substantially." The golden age of innovative drugs began in 2015. Since then, numerous companies have experienced rapid financing, valuation surges, and sharp corrections post-IPO. Today, China ranks second globally in new drug approvals, pipeline volume, and blockbuster drug count. The acquisitions of ProfoundBio and Gracell by MNCs represent recognition of this standing.

In an industry of "more for the same price," buyers are starting to enter with cash in hand.

"What's truly hard to sell isn't bad companies — it's mediocre ones."

Whether called M&A or "selling out," the act seems perennially bound to negative connotations, especially for founders, consumers, and retail investors. This can even become a competitive warfare tactic — so once a decision to seek a buyer is made, speed is essential, lest rivals exploit and spread the news. But from an intermediary's perspective, the most failed company isn't one with poor performance or negative profits; it's one without an ending.

Wang Chao of Lanqiao Capital told Anyong Waves: "China's past tech companies were intensely competitive — even every niche could spawn 10 companies, but they had no core moat, only a path to mediocrity. Though cash-flow positive and profitable, they slowly become just a business." Such companies hold no M&A value. Beyond these, many companies that withdrew their IPO materials after prolonged review delays have undergone securities firm tutoring with sound financials and legal compliance — if willing to accept acquisition, they would make excellent targets.

Wang Chao added: "In 2024, the M&A and restructuring cases that actually closed — as opposed to rumors floating in the air — required entrepreneurs to summon extraordinary courage and resolve."

Quoting Shan Weijian's recent description of China's M&A atmosphere: "You hear footsteps on the stairs, but no one comes down." Whether those on the stairs descend or not may shape a generation of practitioners' careers — but it's those drinking tea and chatting downstairs who decide their own fates.

Everyone's Looking for Buyers — But Where Are They?

Fact 8: State Capital Becomes a New Source of Buyers

1. In 2024, at least 20 listed companies saw their controlling shareholders change to local state-owned entities.

Central SOEs have also been active in M&A. In 2024 alone, the healthcare sector saw major deals including China Resources' 6.2 billion RMB acquisition of longtime TCM listed company Tasly, General Technology Group becoming the largest shareholder of Neusoft Medical, and Sinopharm's HK$15.4 billion privatization of China Traditional Chinese Medicine.

2. In just three months, local state-owned entities in Beijing, Nanjing, Chengdu, and elsewhere announced the establishment of M&A funds, and the number of industry funds jointly established by local state capital and listed companies is also increasing. According to ZERONE data, the September 2024 filing of fund capital structures showed 201 instances of government funding — placing it first on the capital contribution ranking.

3. State capital M&A keywords: State-backed M&A is starting to explode, and the entry of such deep-pocketed buyers is naturally welcome news. Following the introduction of several policies, local state-owned entities have been establishing M&A funds one after another. Among them, funds with explicitly stated M&A directions are concentrated in biopharmaceuticals and advanced manufacturing, while some general-purpose funds without clear stated focuses tend to emphasize their "mission and vision" instead, including: supporting exits, or supporting industrial chain integration, and so on. Statistics show that when selecting acquisition targets, local state capital generally prefers listed companies with these characteristics: market cap not exceeding 5 billion RMB, price-to-book ratio below 3x, while simultaneously possessing relatively high revenue and profit.

Fact 9: Listed Companies Begin Shedding Their "Shackles"

1. In the first half of 2024, there were 37 M&A transactions with individual deal values reaching 1 billion RMB or more, of which 78% of the buyers were listed companies. The remainder were state-owned institutions and unlisted companies. During this period, among all domestic M&A transaction buyers, listed companies accounted for 61%, while unlisted companies (startups, unicorns, etc.) reached 25%. Together these two categories comprised 86%, forming the absolute core force of domestic M&A sellers.

2. Two M&A approaches for industry players: horizontal or vertical M&A according to core business, or cross-border M&A. Before the "Six Measures for M&A" were introduced, cross-border M&A was primarily restricted by policy, while horizontal M&A faced challenges because industries were previously in such rapid development that acquired targets risked being technologically obsoleted soon after purchase. 3. This year's policies encouraging M&A contained several particularly impactful provisions: first, they explicitly allowed private equity funds to participate in integration between listed companies; second, they explicitly permitted cross-border acquisitions and acquisitions of loss-making enterprises. This removed restrictions for two major categories of buyers, and especially once the restrictions on cross-border and loss-making acquisitions were lifted, 9 companies immediately announced plans for cross-border M&A of semiconductor assets, extending into the integrated circuit sector. 4. No longer obsessed with becoming "universe-scale giants": Internet giants, once active players in M&A transactions, have seen their deal frequency decline year by year. The antitrust policy beginning in 2021 was the primary reason for the collective cooling-off of major platforms. Over the past two years, the few moves by these giants have concentrated in cross-border M&A: for example, ByteDance and Alibaba's cross-border M&A of overseas e-commerce, and Meituan's acquisition of large model company Light Year Beyond. After MINISO's acquisition of Yonghui, "Dark Tide Waves" discussed this with Zhang Xinzhao. Zhang previously worked in JD.com's strategic investment department, and Yonghui happened to be his last case at JD: "Internet was the core buyer back then, and the mentality was that internet would transform everything, digitalization would transform everything, so JD bought Yonghui, Alibaba bought RT-Mart. The shelf-based logic and supermarket business born from the seller's era reached its peak at that time, but subsequently encountered enormous challenges. This Yonghui M&A case is a footnote in the transformation of retail."

> Fact 10: VC/PE Wants to Become Buyout Funds

1. Primary market investment and financing volumes are declining, and some investment institutions have begun turning their attention to controlling-stake M&A. Among these, because enterprise valuations are relatively low, the consumer sector has become a direction where former growth-stage funds can transform. In 2023, Qicheng Capital, which was strengthening its M&A team, told "Dark Tide Waves": for controlling-stake M&A in the consumer industry, the core criterion is the target's cash flow. Taking a food factory M&A case that Qicheng is currently working through as an example, after Qicheng becomes the controlling shareholder, it can leverage its good relationships with downstream food brands to help connect the target with supporting factories for customized product development. The reason cash flow is core to consumer M&A is that while the fund conducts controlling-stake M&A, it will receive annual dividends, typically with a target of recouping investment in 3-5 years. Afterward, finding a strategic industrial buyer for the target becomes a much more leisurely process.

2. M&A is considered more difficult than equity investment partly because of target management, involving company operations, production, and various other aspects. But for some investment institutions, this kind of "post-investment management" actually becomes an advantage. In 2017, Harvest Capital partnered with Orient Asset, one of the four major AMCs, to acquire over 70% of Dalicap for 317 million RMB, becoming the latter's controlling shareholder. After investment, Harvest Capital dispatched executives to Dalicap, restructured corporate strategy, and subsequently upgraded the company's sales, production, and R&D. Dalicap later achieved doubled revenue and profit, and successfully went public.

"Everyone is waiting for mature buyers, and they're still on their way."

At any time, listed companies and industry leaders are the absolute main force in M&A. It's just that before the Six Measures for M&A were introduced, listed companies theoretically could not pay for cross-border enterprises or loss-making enterprises — cross-border targets corresponded to listed companies' expansion needs, while loss-making targets corresponded to strategic considerations.

However, despite these buyers' strong M&A intentions, the valuations of available targets in the market still don't seem to have fallen to their psychological expectations. On one hand, past capital bubbles still need to be squeezed out; on the other hand, as the economic environment changes and secondary market performance shifts, buyers themselves are also short of spare cash.

The deepest pockets currently belong to state capital, but multiple investors told "Dark Tide Waves": the core purpose of state capital M&A is investment attraction. Take Qingdao as an example: in recent years, Qingdao state capital has been very active in controlling-stake M&A and investment, but examining the details closely, whether clean energy companies or new materials companies, all involve emerging industries strongly supported by the state, and can integrate with the city's existing industries, helping to improve local industrial chain layout. The KPI for local state capital is not strategic synergy from industrial investment, nor financial returns from financial investment, but GDP. If local state capital can smoothly take controlling stakes in several industry leaders, it can help that locality leap up in provincial GDP rankings. For this reason, state capital will not buy any loss-making companies.

Conclusion

Before answering when China's M&A wave will arrive, perhaps we must first answer whether China needs an M&A wave?

The United States, as a mature financial system that has weathered more cycles, is our habitual point of comparison. Historically, the US has experienced five M&A waves, each accompanied by economic prosperity, policy loosening, and industrial boom, each greatly pushing forward the development of the entire social economy and industrial landscape — including post-war economic recoveries after both World Wars, and the economic expansion phase driven by accelerating globalization in the 1990s.

Yu Tong of Yicun Capital felt the lingering effects of M&A waves during his travels in America: "In any small town, you can see large chain stores. In China, what you see are relatively fragmented enterprises, indicating that China has not yet undergone a comprehensive industrial aggregation process. China has never truly experienced an M&A wave before, but we believe one will definitely emerge in China's future."

An M&A wave means that the market is squeezing out the bubbles from the development wave of the incremental era, and this is precisely a way for the stock era to seek sustained, efficient development.

So what are the necessary conditions it requires?

First is changes in the economic environment. In the present context, this means slowing GDP growth. Over the past 20 years, China's GDP has soared from 2 trillion to 18 trillion USD; the profits and returns from this incremental asset growth were primarily captured by venture capital and growth investments. But times have changed — it's now M&A transactions' turn to capture returns in the stock market.

Second is structural willingness to sell, matched with valuation de-bubbling. But valuations are still in the process of bubble-squeezing; perhaps we must wait until the market's wealth effect accumulates sufficiently and experts enter before valuations gradually find their settled levels.

In objective terms, the emergence of an M&A wave certainly requires policy support, and moreover it appears at different speeds in different industries. In the view of Li Gang of China Renaissance: capital watering is an important prerequisite for an M&A wave to emerge in an industry — first, because under capital watering, enough enterprises grow to provide numerous possibilities for the M&A tide; second, because of exit needs in downturn years. Enterprises that have never taken investment can hibernate through the winter, but enterprises that have taken equity investment, or even signed IPO ratchet agreements, have no alternative. The new consumer industry, once infinitely pursued by capital, is a typical example. Qicheng Capital partner Zhang Xinzhao also predicts that the next two to three years will be an opportunity for explosive M&A of small and medium-sized consumer enterprises.

For a Chinese market that fundamentally pursues efficiency and development, the M&A wave will certainly come. But in 2024, it is still on its way.

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References:

[1] IT Juzi: "2024 H1 Chinese Enterprise M&A Transactions: Total Transaction Value Nearly 200 Billion RMB, Up 22% Quarter-over-Quarter"

[2] PwC: "2024 Global M&A Trends Mid-Year Outlook," "2023 Chinese Enterprise M&A Market Review and Outlook"

[3] Deloitte: "2023 Chinese M&A Market Insights and 2024 Outlook"

[4] Zero2IPO Research Center, CDH Investments: "2024 China M&A Investment Trends Insights and Strategic Guide"

[5] M&A Piggy: "Investment Attraction: State Capital Acquires Controlling Stakes in 13 Private Listed Companies"

[6] M&A Traps, by Yu Tiecheng

[7] Chang Lei Capital: "Is A-Share M&A Attractive?"

[8] Lifeng Law Firm: "VC/PE Fund Repurchase and Exit Analysis Report"

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