Chapter 78 Strategy Neither Tianhe nor Muhe currently has a mature management of the company's staff are from a technical background. This led to the problem of strong technical capabilities but weak management and innovation capabilities when forming the early stage M&A team. Tianhe Seed is in good shape, with Yan Qun, a middle and senior management staff from China Seed Group, as its leader, so there should be no problem with the early preparations for mergers and acquisitions. But Alfalfa Agriculture and Animal Husbandry was at a loss as they were all technical personnel in the fields of soil improvement and forage planting, and the only one who had anything to do with the dairy industry was Ding Ji. Helplessly, Guo Yang had to increase investment in external forces for mergers and acquisitions. Fortunately, Guo Yang still has a base in the capital. In Beijing, Yang Cheng was leisurely browsing the news on the portal website in his office. While watching it, I felt regretful. "What a pity. I didn't expect that natural rubber would not be affected by China's entry into the WTO this year, but would rise steadily. This is one of the rare bull markets in my country in the past five years. "Soybean futures are doing OK this year, but if my boss had listened to me and done two trades in natural rubber, I would have made a lot of money this year."
Yang Cheng analyzed it carefully for a while and decided that the natural rubber futures market in 2002 would probably end in a slow bull market. However, the domestic rubber market has stopped harvesting and the inventory level in the carry-over area is also declining. There should be another bullish trend in natural rubber at the beginning of the year. I have to persuade the boss again. You have to be proactive when doing your work! Otherwise my boss will treat me as a tool. But in fact, Guo Yang really treated Yang Cheng as a tool. I called Yang Cheng, general manager of Beijing Weiguang Investment. Guo Yang said directly: "Yang Cheng, find a professional team of lawyers, accounting firms, tax experts and others who are proficient in corporate mergers and acquisitions in Beijing. I will ask my assistant to send you some information later." "Okay, boss." Yang Cheng was a little curious. Was the boss going to make a big move? "Also, how is the progress of my acquisition of NetEase's shares?" "Boss, according to your instructions, half of the soybean futures warehouse receipts have been sold for profit. Currently, 60 shares of NetEase have been purchased through a company registered in Hong Kong Island, with an average price of about US$6." Hearing this, Guo Yang breathed a sigh of relief. He almost caught up. "Okay, well done, you can continue to buy NetEase shares." Yang Cheng felt very puzzled. "Isn't it a bit late to buy now? NetEase's stock price has been correcting recently, and the benefits brought by the game have almost been digested by the market." "It's okay, keep buying. Soybean futures should be relatively stable in the near future. It's enough to keep some funds, and buy all the rest in NetEase first." Guo Yang has often seen promotional advertisements for "Westward Journey Online 2" on the web recently. This game has become popular in the streets and alleys since its launch and is deeply loved by players. At this point, NetEase has once again discovered a new gaming growth point for China's Internet. Although it is a little late to buy NetEase shares now, Guo Yang knows that based on the current price, he will definitely make a lot of profit in the future.
As for the soybean futures turmoil, the main opportunity was still in the second half of 2003. "Boss, do you want to buy some natural rubber? I think there should be a chance at the beginning of the year." "Natural rubber? Forget it, I don't quite understand this." After thinking about it, Guo Yang recalled that Yang Cheng had mentioned it to him some time ago. You don't understand, but I do! Yang Cheng wanted to say this, but in the end reason prevailed over impulse. Guo Yang also felt Yang Cheng's emotional fluctuations, but he still decided to do as he pleased. Let’s not talk about Yang Cheng’s professional ability for now, but at least Guo Yang has the advantage of foresight and knows which investments have a greater chance of making money. The 'soybean futures crisis' and investments in Internet companies were the safe ways he chose to supplement his sources of funds. Besides, 2002 is almost over! SARS cases have already appeared in the south, and the situation will be more serious in the first half of next year, but the Internet industry has also ushered in a period of rapid development. Thinking of this, Guo Yang continued to ask: "Besides NetEase, will Penguin and Alibaba have a chance to get involved?" Yang Cheng choked up. How could the investment company have so much money in its account? "Boss, it's difficult. Penguin's net profit this year was million, and Alibaba also received financing from SoftBank the year before last." "Forget it, wait until Penguin goes public before considering buying shares." "As for Alibaba, the money raised two years ago should be almost spent. We will continue to contact them to see when the next round of financing will be and whether we have the opportunity to participate." Yang Cheng said, "Boss, there is not enough money in Weiguang Investment Account. Alibaba's next round of financing will definitely be around 3000 million US dollars, and apart from NetEase's stocks, Weiguang's account only has more than million RMB in soybean futures." "Let's get in touch first. It's still uncertain when Alibaba will raise funds. I'll take care of the money." "Boss, do you still want to consider rubber futures?" After a pause, Guo Yang still rejected it. Yang Cheng suddenly felt unwell and felt that this job did not give him any sense of accomplishment. Everything is done according to the boss's wishes. A true tool! …… A week later. The merger and acquisition research work of Tianhe Seed and Alfalfa Agriculture and Animal Husbandry has also been carried out in an orderly manner. The initial screening of M&A targets did not go smoothly. Alfalfa Agriculture and Animal Husbandry has too few targets. Long Province's dairy industry can only be considered as the second tier in the country, but Guo Yang has set the direction: dairy companies with the ability to process liquid milk. The scope suddenly became very small, but they still couldn't find a suitable target. As for Tianhe Seed Industry, because there were too many small companies in the surrounding counties and cities, and they were mixed, the staff became a little confused not long after they started the investigation. This was also Guo Yang’s first time engaging in capital operations, and he had no actual experience in many matters. The external teams he hired were mostly in the fields of law, accounting, etc. At this time, Yan Qun suddenly stood up and found the direction for the research team several times in succession.
At the internal M&A team training meeting, Yan Qun stood on the stage and spoke eloquently and in high spirits. It is very different from his image as an ordinary farmer in Hekou Village. “The purpose of the merger and acquisition is to rapidly expand the scale of the enterprise and broaden its product range and sales areas.” “The absolute speed of M&A does not require to be very fast, but each acquisition must be of high-quality companies, so the actual expansion speed will not be slow.” "Therefore, we must first screen out small companies whose scale is small and whose competition mainly relies on price. Tianhe's target should be well-known seed companies in the province." "We also did a simple survey in the early stage. The top players in the provincial market are: Shazhou Seeds, Oriental Agriculture, Denghai Pioneer, Fengle, Huazhong Jiuquan Branch, Jiuquan Agricultural Science Institute, etc." "But these are all state-owned enterprises or joint ventures, and except for Shazhou Seeds, which has better profit data, the other companies are hovering around the break-even line." "Among the various crops we grow, except for corn and melons, which have their own varieties accounting for more than 10%, vegetables only account for 1%, and we don't even have our own varieties of flowers..." Guo Yang was also learning in the audience. Hearing this, he felt that although Tianhe had no revenue now, it was definitely among the best in the province in terms of its own varieties. "Finally, after some screening, we initially set three targets: Shangyang Seed, Blue Sky Seed and Brilliant Seed." Guo Yang looked at Yan Qun with a little surprise. "After preliminary investigation, the asset size of the three companies did not exceed 3500 million yuan, and their management was relatively standardized, and there were no historical problems..." Huihuang Seed Industry was a thorn in Guo Yang's side, and he couldn't help but stand up and interrupt. "Alfalfa Agriculture and Animal Husbandry had contacted Huihuang before, but the other party did not seem to have any intention of selling." The people present looked back and forth between Guo Yang and Yan Qun. Guo Yang also realized that his action was a bit abrupt, but fortunately Yan Qun remained calm. "I have heard of this before, but after careful research, I still believe that the shareholders behind Brilliance have the motivation to sell." “Maybe the communication method in the early stage was wrong.” Guo Yang sat down. How did he communicate with Huihuang in the first place? Mr. Wu, I would like to acquire Huihuang. Could you please contact the shareholders? Wu Feng: ???? Guo Yang roughly recalled the scene at that time and thought that it might be too direct. All I could hear was Yan Qun continuing to impart his experience to everyone. “M&A execution negotiations are very strategic.” "Many seed companies generally have the mentality of 'being content with a small fortune' and would rather be the head of a chicken than the tail of an ox', and they are resistant to being acquired." “So, when negotiating, avoid using words like ‘acquisition’ and ‘integration’, and at the same time, be low-key, act swiftly, and complete acquisitions quickly.”
"The word 'acquisition' can be easily misunderstood. We can change it to the desire to cooperate with good manufacturers." "Integration can also be replaced by our support and development of the original brand, solemn commitment and flexible implementation..." Yan Qun’s explanation became more and more detailed and in-depth, and he also mentioned many little tricks. From how seed companies conduct investigations and research, to merger and acquisition execution negotiations, and finally how to integrate the seed breeding and promotion team. The employees who attended the training were fascinated by the presentation. In the end, many other employees in Tianhe’s office also came to attend the class. After the training, thunderous applause broke out in the conference room. Guo Yang also felt that it was a waste of his talent to let Yan Qun go to the village to compete with the villagers and the village committee. Moreover, seeing how seriously the employees were studying, he felt that more training sessions like this should be organized in the future. With paid training, employees’ sense of identity should increase dramatically! At the same time, it can accelerate the training of senior talents within the enterprise. Guo Yang continued to think. The scope of training should also be expanded. We can select some potential talents and middle and senior level cadres from within the organization and invest appropriate training resources and funds in them. Only in this way can we build a mature team as soon as possible. At the same time, it can also strengthen the construction of corporate culture. When Tianhe’s seeds, alfalfa’s forage feed and dairy products start to be produced and sold, in order to quickly expand the market, mergers and acquisitions are inevitable. Whether the corporate cultures of the parent company and its subsidiaries are integrated is also the key to whether the merger and acquisition can ultimately be successful. Guo Yang wrote these down and assigned them one by one. After completing these tasks, Guo Yang had to go back to his hometown. His eldest brother called many times to ask about the situation, but he always evaded the call by saying he was busy. But always avoiding is not a solution. Moreover, he heard that the rumors spread by the village aunties were becoming more and more outrageous. If he didn't go back, there would be rumors that he would be sent to jail. (End of this chapter)