In every public company, mergers and acquisitions are a normal part of the business. Some companies are always growing externally, some companies try to do many items themselves or organically, there are multiple variations. The companies which are growing externally, tend to have a core group of people who make the decisions of which companies to buy as the company grows in size and market share. How the company ensures the synergies expected or how the logistics flow to the bottom line is a different skill set, but often a CEO will be on the search for companies to buy or people they want in the firm.
In an article by Julie Zhu and Xie Yu of Reuters, one of the more prominent deal makers in the Chinese banking sectors is Bao Fan of China Renaissance. In the world of China, if the government likes what you are doing, they encourage you, if they do not like you, you are removed for a period of time. In the case of China Renaissance, Bao Fan is the founder, chairman and CEO of the bank. In China at the moment, the government is trying to slow down the corruption and it was decided that Mr. Fan was part of the problem or linked to the former President Cong Lin and had to be detained.
While Mr. Fan was the dealmaker and is absent, co-founder Kevin Xie and the head of investment banking Wang Lixing are running the bank. The firm was started in 2005 to match capital-hungry startups to venture capitalists and private equity investors. The firm expanded into services including underwriting, sales and trading.
Linking to dividend paying stocks, although every person is important, the market tends to rely on a few people who are the face of the company and present the highlights of the public company on investor days. When one of the people the market knows either retires, moves firms, or leaves, the market needs to learn to know another person. It is natural for a a company for a smooth transition to not be affected by the news, but a company without a smooth transition the stock will tend to fall. It will be senior management to reassure the market as they get to know them and then the stock can move up again. If the transition in your company is not smooth, you should seek out alternatives.
There are more questions than answers, till the next time – to raising questions.