Core Viewpoint - A-share listed companies' equity mergers and acquisitions (M&A) are complex systemic projects involving strategic planning, legal compliance, financial valuation, regulatory approval, and subsequent integration [1] Summary by Sections A-share Listed Company Equity M&A Main Process - The M&A process consists of eight stages: preparation, target selection, due diligence, transaction design, internal decision-making, regulatory approval, implementation, and post-merger integration, with a focus on compliance and risk control [3] Key Stages of M&A - **Preparation**: Define strategy and assemble a team [4] - **Target Selection**: Identify potential targets [4] - **Due Diligence**: Comprehensive risk assessment focusing on legal, financial, business, and tax dimensions to uncover potential risks such as hidden debts and litigation disputes [4] Transaction Structure Design - Balancing interests of both parties by addressing payment methods, valuation, and transaction entities while considering the requirements of the listed company, target shareholders, and regulatory bodies [5][6] Internal Decision-Making and Regulatory Approval - Internal governance procedures must be followed, and external compliance permissions must be obtained from regulatory bodies such as the China Securities Regulatory Commission (CSRC) [8] Implementation and Post-Merger Integration - Completing the transfer of equity and ensuring successful integration is crucial for the success of the M&A [8] Core Points of A-share Listed Company Equity M&A - **Valuation Pricing**: Avoiding overpaying or underselling [8] - **Compliance**: Strict adherence to regulatory guidelines [8] - **Payment and Financing**: Balancing liquidity and control [8] - **Risk Control**: Focus on preventing valuation and integration risks [8] Valuation Methods - Common methods include PE, PB, DCF, and EV/EBITDA, tailored to industry characteristics [9] Financing Arrangements - Options include self-funding, bank loans, private placements, and convertible bonds, with considerations for financial costs [9] Internal and External Approval Processes - Board and shareholder meetings are required for significant asset restructurings, with specific voting thresholds [9] Integration Strategies - Strategic, business, management, and cultural integration are essential for realizing synergies and ensuring stability [9][10] Performance Commitments and Compensation - Main compensation methods include share compensation or cash compensation, typically covering a three-year performance commitment period [11]

Group 1 - The article emphasizes the importance of valuation methods in investment, highlighting that all value investment schools focus on asset valuation [4][12][32] - Valuation is defined as the method of measuring the relationship between asset price and value, which is a concept applied in daily life [5][6][10] - The article provides examples of valuation methods for both bond and stock assets, illustrating how investors make rational decisions based on interest rates and company earnings [13][21][32] Group 2 - For bond assets, a simple valuation method is presented, where investors choose the option with the higher interest rate, demonstrating straightforward decision-making [15][17][19] - In the case of stock assets, the article discusses a hypothetical scenario where a company with stable annual profits is valued between 8 to 15 times its earnings, aligning with average price-to-earnings ratios in the market [26][27][30] - The article notes that investor sentiment can significantly influence valuation, with lower valuations during bear markets and higher valuations during bull markets [41][42][54] Group 3 - The article highlights that while valuation primarily affects short-term returns, long-term profitability is driven by economic cycles and overall productivity growth [46][51][52] - It mentions that not every market phase presents undervaluation opportunities, particularly in bull markets, necessitating asset allocation strategies [55][57] - The article concludes by referencing classic stock-bond allocation strategies used by renowned investors like Graham and Buffett [58]