The Urgency And Inevitability Behind The Acceleration Of Integration And Acquisition Of Industrial Internet

Recently, the news of mergers and acquisitions is constantly increasing. From the perspective of industry development, intensification and scale can achieve the goal of reducing costs and increasing efficiency, and upgrading enterprises' competitiveness through structural adjustment is the only way for enterprises to develop.

With the development of industrial Internet and competition intensification, the industry has entered a new round of integration. Many enterprises have withdrawn, while some big head enterprises have started buying and buying models. The fast moving consumer goods industry, the Internet platform, the long term approval, the industrial goods service platform, Zhen Kun line, as a niche industry, the unicorn enterprises are expanding their scale through a series of mergers and acquisitions.

In the current epidemic, many industry people said that in 2020, mergers and acquisitions will usher in blowout.

　　 What is the purpose of M & A?

Huaxing capital said that the future growth of the head enterprise could come from three main directions: the fine integration of the sinking market, the gold rush industry, the Internet and diversified flexible capital operation. The industrial Internet has gradually become a new focus of attention in the primary market. The Matthew effect of capital has brought the rapid development of the industrial Internet head enterprises, and merger and acquisition integration will also become a typical expansion model of the head enterprises.

　　 1. seize market size and expand category.

In the overall market downturn, strong and strong joint efforts to integrate resources, seize market size and opportunities is a way of enterprise development. With regard to the merger of easy to sell and palm quick sales, Yi Long's transformation from the wine business platform to the comprehensive FMCG industry internet platform, its "nationalization and whole category" strategy also means that the long term batch coverage will be ploughed from the first tier cities in the country to the three or four line cities.

The palm rapid sale started in August 2016. It is a super fast B2B enterprise in Southern China. It operates in 13 cities and 30 counties in two provinces of Guangdong and Fujian, and serves 100 thousand stores. It is a typical representative of regional fast moving products platform. The M & A is a typical example for the head enterprise to merge into the regional market through merger and acquisition.

And Yi Long batch in the previous May 2018 merger and acquisition of B2B platform "buy goods", start the strategic layout of the rest food category, has made an important step towards advancing its own platform strategy. After trading only three months, the turnover of easy to batch food has increased several times. Generally speaking, the merger and acquisition of Yi Long batch are all focused on the implementation of the strategy of "nationalization and whole category".

In the United States, the expansion of scale through mergers and acquisitions is already a fairly mature model. For example, Gu Anjie, Sysco and so on, the growth history of enterprises is also a history of acquisition. For the Yi Long batch, several rounds of financing are very short, and become a unicorn in the fast moving product industry rapidly. M & A is also a fast word to seize the market for rapid expansion.

According to Kantar data, global sales of fast moving products accounted for 5.1% of global gross domestic product sales in 2018, and there is still room for growth in the future. In recent years, Yi Long approved the ambition of strong development.

　　 2. support revenue and business transformation

Moreover, the benefits of mergers and acquisitions can not only rapidly expand the scale of the market, but also an important opportunity for listed companies to support performance and revenue. They can not only be reflected in revenues and valuations, but will also bring about changes in business models.

For example, Zhuo Zhi Lian bought shares of China Agricultural Network and Sinhua Plastics Exchange. From the earnings report of drow Chi Lian in 2018, it can be clearly seen that revenue reached 56 billion 100 million yuan in 2018, an increase of 152.2% over the same period last year. The Board believes that the sharp increase in revenue is mainly due to the group's 50.6% stake in China Agricultural Network in June 2017. As of December 31, 2018, the annual financial performance of China agriculture network has been incorporated into the group merger.

At the same time, Zhuo Zhi Lian has made great strides in the transformation of the industrial Internet platform. Yan Zhi, chairman of Zhuo Zhi Lian, said that with the company's about 3 billion yuan in 2017, the company's revenue was more than 95% from the B2B trading platform. Also in February 23, 2020, PepsiCo announced the purchase of paraquat, also for online market growth, aimed at digital exploration and transformation.

　　 3. absorb technology and talents

It is also a simple and crude way to absorb directly from the technology and talent resources through merger and acquisition. After March 2019, the merger rumor about 1919 and Dan Lu net finally came to a close. In February 2020, the 1919 Chairman Yang Ling Jiang announced: "1919 of the next warehouse business has completed the integration with Dan Lu net, and will arrange the larger B terminal online and offline. Supply chain platform. From the end of last year to now, 735 franchises have been opened. Peng Yong, the founding member of the original Dan Lu network and CEO of Dan Lu net, is the 1919 general manager of the next warehouse. "

Dan Lu net was formally launched in May 2015. In 2018, GMV was as high as 27 billion yuan. It was a large B terminal supply chain platform at that time. But after 2018, it has been in a state of loss because the business mode is not focused and the capital chain is broken. It has invested a lot of energy in the management system. It is no pity that this experience and technology will be dissipated with the platform. 1919, integrate the existing B2B business with Dan Lu network, and intend to create a strong competitive edge to open the B terminal market.

　　 The sequelae of mergers and acquisitions should not be underestimated

If the pressure caused by the outbreak of SMEs on the medium and small enterprises causes the industry to accelerate integration is an accidental opportunity, then the integration logic behind the merger and reorganization is the only way for the development of enterprises.

However, mergers and acquisitions are not only the merger of two enterprises, but also the process of long-term integration of business. Although mergers and acquisitions bring many benefits, the industry does not lack the drag events due to blind mergers and acquisitions, and conflicts of interest often leave many sequelae.

M & a means investing a lot of capital and performance commitments. Proper acquisition is more advantageous than disadvantages, but once the performance fails to fulfill the promise, the risk of valuation collapse is hard to imagine. In particular, affected by the epidemic, at the moment of tight funds, vigilance for impulse financing and blind mergers and acquisitions may be a hidden bomb for future performance decline.

Sun Qiang, director general of Huaxing capital and head of the M & a group, has said that the driving force of the development of the industry internet is changing, and the driving force of the business mode driven transformation to the technology mode is changing. The rhythm and aesthetics of investment are also changing. In the era of consumption Internet, through capital investment to occupy large market in a short time, the merger of the top two models to achieve capital withdrawal and elimination of competitive cost through the merger of similar industries is no longer applicable in the era of industrial Internet. It needs more energy to think about integrated logic and collaborative analysis.