348. Prepare to go public

March 14, 2007.

It was a sunny morning. Although the weather was still very cold and the temperature in the imperial capital was minus 1 to 2 degrees Celsius, several willow trees at the entrance of the company had already sprouted new buds.

After a while, you can see the scene of flying catkins all over the city.

Some people like the scene of willow catkins flying in the imperial capital, because it is like the snow in the sky, and each willow catkin is gentle and looks really romantic.

But Cao Yang doesn't like it very much because he has intensive phobia as soon as this season comes, especially when the catkins fly in front of him, he always feels like they will be sucked in, causing him to cough continuously.

So in the season when willow catkins fly, Cao Yang will not go out if he can go out, and if he can go out, he will not go out if he can go out.

On such a sunny morning, Cao Yang invited Chief Strategy Officer Liu Zhiping to his office and made the second most important decision in his life besides getting married.

"I decided to go public," said Cao Yang.

"Hey?" Liu Zhiping's eyes lit up.

Didn’t expect that Boss Cao would agree to it one day?

He had been waiting for Cao Yang's words for a long time.

Even Liu Zhiping himself felt that he might not hear Cao Yang’s words of listing in his life. He was also preparing to propose to split the company and list it, such as Bomi Literature and Bomi Music alone...

This is actually beneficial for the company to raise funds.

But the size is definitely much smaller than that of Bomi's overall listing.

Judging from Bomi Music’s current size, unless QQ Music is included, the valuation will be up to 1 billion US dollars.

If Bomi Group is listed as a whole, the valuation is terrifying, especially after Bomi smartphones are released, the valuation will increase a lot.

The last time Liu Zhiping asked Cao Yang to discuss listing 7 months ago, he valued Bomi at about US$70 billion. Then, now, after Bomi’s smartphone was released, Liu Zhiping’s valuation of Bomi should be around US$1,000 to US$110 billion.

Of course, this is not just a credit to Bomi smartphones. In fact, the good box office results achieved by the release of Wandering Earth are a loss, but the box office has broken records. Moreover, the capital is very optimistic about Bomi Pictures' future development, especially in the 3D special effects field, so the valuation will increase.

Then, with Bomi's own growing business, games, QQ, music, information platforms, literature... Even if he removes the mobile phone business, Bomi's current valuation is at least more than 80 billion US dollars.

After so long, Bomi has grown into a giant.

Whenever Liu Zhiping thinks of this, the fields and businesses that Bomi Company is involved in, he feels chilling.

...

Then, to this day, Liu Zhiping's first reaction was to hear the sentence [listing] from Boss Cao's mouth.

A miracle happened!

"Okay."

Liu Zhiping was stunned for a moment, then pulled open the chair and sat down in front of Cao Yang.

Due to excessive excitement, he accidentally knocked over the teacup on the table when he sat down.

Fortunately, there is no water in the teacup.

He quickly sorted out the tabletop and then began to skillfully boil hot water next to him.

"So...how are we going to go public?"

In fact, Cao Yang himself has also considered a lot over the past period of time.

There are several important reasons why he wants to go public at this point in time:

First, we must raise funds to alleviate Bomi's expansion pressure.

It is best to go public this year, so that you can raise enough funds before the 2008 financial crisis breaks out.

This money can help Bomi do a lot of things.

Second, it is more in line with the interests of employees. After listing, Cao Yang is preparing to take out part of the equity as a reward pool, and will also issue a certain amount of options to the current Bomi employees. At that time, employees can purchase Bomi shares at a relatively cheap price.

This method will make employees richer faster than paying bonuses.

For example, a company earns 40 billion yuan every year, of which only 1 billion yuan may be used to give bonuses to employees. However, after the company conducts an IPO, the entire company suddenly receives a large amount of funds inflow, and employees can also obtain a large amount of wealth accumulation through their shares.

Third, provide the company's influence and credibility. After listing, with Bomi's size, the valuation directly exceeded US$100 billion, which is shocking all over the world. That is to say, the day when the company goes public is equivalent to an announcement to the world-

In the East, a giant dragon rose.

The name of this giant dragon is [Bomi]

Bomi's valuation is now much higher than Apple.

A valuation of US$100 billion can already make Bomi Company the world's number one throne.

Actually, it is normal to think about it. The current Bomi is equivalent to Penguin + half of Apple + half of Google + V Club + Alpha + China Literature + NetEase...

What kind of terrible monster is this?

So the valuation of US$100 billion is already a relatively conservative estimate.

...

During this period, Cao Yang has done a lot of homework for listing.

First of all, after a long period of thinking, Cao Yang believes that listing must be listed, and the entire Bomi Group should be listed, so that the funds raised will be the largest.

In the future, if the company under its subsidiary develops to a certain scale, it will be feasible to split it out and go public independently.

Split and listing are also due to the needs of money and the development of the branch's senior management.

Because the head office has so many equity shares, if you want to attract more high-end talents to enter the market, you are embarrassed to split the head office's equity and use subsidiaries to list, so as to maximize the benefits for these new talents.

Then based on the overall listing of Bomi Group, Cao Yang had several more worrying issues before:

The first is whether it can be listed in the United States without selling its stocks in the United States, so that it can cut a wave of American leeks.

Liu Zhiping had told him about this problem before.

Listed in Xiangjiang, you can sell it in the US market through ADR and raise more funds through American shareholders.

In terms of regulation, we still rely on our motherland, which is much less risky than listing on Nasdaq.

It is very important to rely on the motherland. Bomi can enjoy relevant policies and also has a huge protective umbrella.

The second issue that Cao Yang is more worried about is—

After the company goes public, will it be eliminated due to dilution of the founder's shares, or the company's control is not in its own hands?

It's complicated to say -

There is one thing that is not good for listing in China, that is, there is no different rights in the same shares, which is the legendary AB share mechanism.

The company divides stocks into two levels: A shares and B shares. It only has one vote for A shares issued by external investors, while the B shares held by management have N votes for each share.

For example, many high-tech listed companies in the United States mostly use AB shares, and N usually takes 10, which makes the founding team have voting rights 10 times their shareholding ratio, thus firmly controlling the right to speak for the company's management.

However, Class B shares cannot be traded publicly. If you want to transfer, you must first convert it into Class A shares with "one share, one vote".

Although Class A shares suffer losses in voting rights, they often receive compensation in terms of profit distribution, priority compensation, etc.

Since the founders are soul figures in many companies, and the purpose of many capital tycoons investing is to obtain rich returns and do not require control of the company, AB shares have been used in many high-tech innovation companies.

Therefore, in order to maintain their control, many founders of companies choose to list on the Nasdaq in the United States, such as Baidu and JD.com...

Listing on Nasdaq can have different rights mechanisms.

JD.com CEO Liu Qiangdong owns 15.8% of the shares but 80.2% of the voting rights, because he basically holds B shares, and the voting rights ratio of B shares is higher.

...

Now that I have decided not to list in the United States but in Xiangjiang, the AB shares method cannot be used.

So Cao Yang decided to take the Ma Yun route.

Ma Yun, the boss of Alibaba Group in her previous life, after the company went public, Ma Yun only accounted for 8.9% of the company's shares as the company continued to dilute its shares.

Executive Vice Chairman Cai Chongxin holds 3.6% of the shares;

Yahoo and SoftBank hold 22.6% and 34.4% respectively

Other Alibaba executives hold 30.5% stake

SoftBank has a large holding, but Alibaba is not Son Son's final decision, so there is a lot of knowledge here.

Overall, Alima has done quite well on four levels.

First, it is the control of equity. Ma Yun adopts the voting right entrustment and a joint actor agreement, and then adopts a comprehensive control method for different objects.

For Ali’s Eighteen Arhats, which are the 18 founders of Ali, Ma Yun used the method of delegating voting rights, and concentrated all the voting rights of the entire Eighteen Arhats on Ma Yun alone.

In this way, Ma Yun has the highest decision-making power, and he can exercise his decision-making through the [voting right entrustment] agreement.

Then for external investors, Ma Yun signed a joint actor agreement with them.

What is a joint actor agreement?

When the company encounters major decisions, these investors who have signed the agreement on joint actors need to be consistent with Ma Yun's opinions.

The second is the control of the board of directors.

First of all, there are controls of board seats. Before Alibaba went public, there were four board seats in total, two of which were controlled by Ma Yun’s team, and the other two were each owned by SoftBank and Yahoo.
To be continued...