Hundreds of due diligence personnel spent two months reviewing all business revenue, product data, and even contract terms of Ruixiang and Zhonghe, clearing all obstacles before the merger.
Although it is not as hard as moving bricks on the construction site, it is not easy either way. Everyone has their own tiring methods.
Fortunately, Bao Fan is bald, otherwise a lot of hair would fall out.
Ruixiang and Zhonghe together have dozens of application products, with either tens of millions or hundreds of millions of users.
Its business also covers hundreds of countries, and it also has research institutes and offices overseas.
There are a lot of companies that have equity participation, including dozens of unicorn companies, other start-up companies worth tens of millions, and hundreds of companies with valuations of hundreds of millions.
In addition to Bao Fan’s Huaxing Capital, three other well-known due diligence agencies participated.
The four parties worked together to bring Ruixiang and Zhonghe to a great start.
Various assets including scientific research results, laboratory technical talents, etc. were evaluated.
Although he often works overtime until late at night, Bao Fan's motivation has not diminished at all.
After all, not everyone has the opportunity to participate in the largest merger and acquisition in China's Internet history.
China Renaissance is about to be listed on the Hong Kong Stock Exchange, and it also needs this kind of awesome M&A case to increase its value.
The M&A teams of Ruixiang and Zhonghe each reviewed the due diligence report of the other party and reviewed it item by item.
After confirming that everything was OK, the shareholder representatives of the two companies officially started final negotiations.
"Ruixiang's valuation of US$100 billion is indeed a bit outrageous."
As the CEO of Zhonghe Group, Lu Qi participated in this negotiation on behalf of Zhonghe Group. His views were supported by a group of shareholders sitting next to him.
"Last year it was only 66.6 billion. In less than a year, it has increased by 50%?"
"Financial affairs will not be easy to do this year, and Ruixiang's business may be hit hard. It's good that the valuation has not been lowered. Are you still thinking of a valuation of US$100 billion?"
"Come on, Ruixiang is not number one in any field, but our short videos in Zhonghe are number one in the world."
…
A large number of shareholders of Zhonghe refuted and criticized, but Lin Zhenyang was not angry.
"Ruixiang had a revenue of more than 50 billion last year, and scientific research expenditure and technology investment exceeded 3 billion US dollars. Even so, we are still profitable."
Lin Zhenyang smiled and asked Zhonghe Yizhong shareholders: "Where is Zhonghe? Did it have more than 50 billion in revenue last year? What was the loss figure?"
Ruixiang looked at all this with a smile on the shareholders' side, and cast admiring glances at Lin Zhenyang.
Unlike Zhang Yida, Lin Zhenyang had no shares in Zhonghe and was in the same camp as their shareholders, so he was also selected as the main representative of the negotiation team.
"Current revenue and profits cannot represent the future."
Lu Qi was very calm and said with a smile: "Take Dou Vision as an example. A year ago, our monthly revenue was 300-400 million yuan. Now it has increased 10 times, and our monthly revenue exceeds 4 billion.
Let’s talk about Pinduoduo. It is expected that this year’s GMV will not be less than 500 billion, next year’s GMV will not be less than 1 trillion, and the number of active buyers will exceed Goudong within this year.
Musical.ly is known as China's most successful overseas product and the first software application with hundreds of millions of active users in the West.
In the game sector, we defeated Penguin and NetEase head-on and defended our status as the world’s number one chicken-fighting game.
Other sectors of Big Entertainment, such as long-form videos, music, novels, and movies, have also achieved good results.
From the perspective of business imagination, Zhonghe Group’s valuation should not be less than US$150 billion.”
"$150 billion?"
Ruixiang's shareholders were stunned for a moment, and then strong opposition broke out.
"Are you crazy about money? Who gave you the confidence?"
"The losses are so severe that if we can't raise capital, we will be dead."
"If Zhonghe is valued at US$150 billion, then Ruixiang is valued at US$200 billion. After the merger, we can catch up with Ahri and Penguin. Haha!"
…
Anyway, the shareholders of both parties kept bickering, and the scene was like a wet market.
When it comes to mergers and acquisitions worth hundreds of billions of dollars, a single share is worth a billion dollars.
In the face of such great interests, all self-cultivation and dignity were thrown aside.
The shareholders on both sides are unwilling to give in to each other, and both want to strive for merger conditions that are more beneficial to themselves.
The higher one's valuation is, the higher the proportion of shares in the new group will be, and no one is willing to give in easily.
From day to night, there has been no big breakthrough, and the situation has been in a stalemate.
Bao Fan reported the situation to Zhang Yida who was on vacation in Australia.
Zhang Yida rarely had time to spare. To avoid suspicion, he did not participate in the negotiations between the two companies.
Because he was worried that he would not see live kangaroos next year, he and Zhao Erya came to Australia.
I am going to Paris later in the day to see Notre Dame Cathedral, but I am also worried that I won’t be able to see it if I go too late.
"Ruixiang is valued at US$100 billion? Zhonghe is valued at US$150 billion?"
Zhang Yida felt that compared with this group of shareholders, he still seemed too honest.
"If we keep talking like this, I'm afraid I'll have to spend the New Year in Australia."
Bao Fan laughed and said, "It's not that exaggerated. The asking price is so high, just pay it back when you get there!"
For such a large-scale transaction, consensus cannot be reached in a short period of time.”
"If it really doesn't work, we can only bet against each other. Betting is the best way to resolve valuation differences."
Bao Fan pondered for a while, and then said: "My advice to Ruixiang is to bet on profits, and my advice to Ruixiang is to bet on revenue..."
Zhang Yida listened to Bao Fan explain all his thoughts and said after a while: "It is best for both parties to participate in the revenue bet. One party will make a slight profit and the other will suffer a huge loss. What's the point of the profit bet?"
Bao Fan had a headache. Ruixiang's group was not easy to fool. The key was to make others willing to listen to what he said!
But now that Zhang Yida has spoken, considering his qualifications as an underwriter, no matter how difficult it is, he can only do it.
…
While Ruixiang and Zhonghe were negotiating, Leech Financial announced the completion of a US$11 billion Pre-IPO round of financing, with a post-money valuation of US$122.222 billion.
The huge financing of US$11 billion not only broke the global Internet single-round financing record, but also allowed Leech Financial to surpass Uber with a valuation of US$120 billion and win the title of the world's most valuable unicorn.
As soon as the news came out, it sparked heated discussions among countless netizens.
Some people joke that "BAT" has become "ATM", and others believe that when Leech Financial Services is listed, it is expected to break the $25 billion set by Ali on the New York Stock Exchange in 2014, the world's largest IPO financing record in history.
Stimulated by this news, Rui Xiangyang negotiated even more forcefully.
"Leech Financial Services Capital is only valued at US$122.2 billion. Why is Ruixiang worth US$100 billion?"
Bao Zheyu doesn’t think Ruixiang can be compared with Leech Financial. Among other things, in terms of mobile payment market share in mainland China, Mobao Pay is only half of Alipay and much lower than WeChat Pay. It can only rank second.