The Most Comprehensive Corporate Investment and M&A Process (Recommended for Bookmarking and Repeated Reading)

2. Submission of the M&A Proposal (Report) After identifying both the acquiring and target enterprises, the acquiring party (or both parties jointly) drafts an M&A proposal (report). This proposal is then disseminated through relevant authorities to announce the M&A initiative, clarify the purpose and intent of the transaction, and notify the target enterprise’s creditors, debtors, and contractual counterparties. The design of the M&A proposal should focus on reducing M&A costs and enhancing M&A efficiency, while striving to maintain and strengthen the acquirer’s asset liquidity, profitability, and value appreciation capacity. Key components of the M&A and financing plan include: selection of the M&A structure; determination of the transaction price; planning of funding sources for the acquisition; information disclosure; handling of liabilities; and employee resettlement. In China, domestic M&A activities generally fall into two main categories: (i) purchasing assets with cash or exchanging assets other than cash for target assets; and (ii) purchasing equity with cash or other assets. With the development of the securities market, the latter—equity acquisition—is increasingly becoming the dominant form. For listed companies in China, M&As are predominantly executed via cash purchases of non-tradable shares. This is because cash payments involve relatively low operational complexity and help accelerate the M&A process. Moreover, non-tradable shares—especially state-owned shares—constitute a large proportion of total shares in listed companies; their transfer requires approval from state-owned asset regulatory authorities, and cash-based acquisitions facilitate smoother approval of equity transfers. Under a cash payment structure, careful planning of funding sources must be tailored to the acquiring company’s specific circumstances. Typical funding sources include: the company’s own funds; bank loans; bond financing; and equity financing. Key financial tasks in M&A financing include: advising the acquiring company’s decision-making body on eligibility requirements for applying for M&A loans or launching equity fundraising; determining the amount and term of investment absorption or loans; proposing loan guarantee schemes; planning the company’s capital structure and sources for repaying bank loans; drafting financing plans and related application documents; submitting loan applications; and completing all required approval procedures. Concurrently with finalizing the overall plan, concrete strategies must also be developed regarding: disposition of claims and debts; resolution of social obligations such as employee resettlement; tax incentives; suspension or deferral of interest accrual on bank loans; commitments from involved parties and relevant departments; risk mitigation and control measures; and organizational and timeline planning. When the target is a listed company, special attention must be paid to how the acquisition may affect its stock price, and the timing of the M&A activities must be carefully orchestrated. 3. Asset Appraisal Asset appraisal is conducted based on clearly defined M&A objectives and intentions. The target enterprise undergoes a comprehensive assessment of its entire asset portfolio, establishing a baseline price for asset transfer. Simultaneously, the acquiring enterprise must thoroughly and promptly review and reconcile its own receivables, payables, and all contractual relationships to determine appropriate approaches for handling debt-related contracts. Asset appraisals are typically carried out by professional intermediary institutions such as asset appraisal firms. The determination of the M&A transaction price rests upon the valuation of the target entity; the transaction price often directly influences the choice of M&A structure. When the acquiring party applies for an M&A loan, the transaction price serves as the decisive factor in determining the loan amount. In equity-based M&As, the transaction price is usually set with reference to net asset value per share, fluctuating above or below that benchmark. Currently, many listed companies have issued public announcements regarding equity transfers, with share prices explicitly stated. The average transfer price per share generally approximates the average net asset value per share; some transactions occur below this level, while others command premium valuations.

15 Key Steps and 129 Detailed Elements in the Corporate M&A Process!

10. Taking Over and Operating the Acquired Company 1. Officially assume control of the target enterprise; establish a new management team; assign personnel at the operational level; and swiftly resume production and business operations. 2. The M&A working group conducts a post-transaction review and evaluation. 3. Promptly integrate the acquired company into the parent company’s core capability management system to align with the group’s strategic development goals. 4. Establish a corporate monitoring and management system. IV. Conduct Thorough Due Diligence Equity acquisition essentially entails acquiring an established, long-operating company—far more complex than founding a new one. To mitigate acquisition risks, it is essential to engage reputable intermediary institutions and a competent professional team to conduct due diligence. Intermediaries primarily provide oversight in three areas: • Legal Review by Lawyers: The legal team reviews contracts executed over the past three years, contracts still pending completion, and those scheduled for future execution—assessing their legality and fairness—to prevent fraudulent collusion, such as unauthorized contract amendments or substitutions. • Financial Review by Accountants: The accounting team audits the target’s financial condition and operating performance over the past three years, issuing an audit report that verifies its financial status and results of operations. It also discloses contingent liabilities, non-performing assets, and related-party transactions. Close collaboration between accountants and lawyers in evaluating major transactions significantly reduces acquisition risk. • Valuation Assessment by Appraisers: A proficient team of appraisers provides a reasonable estimate of the target company’s actual value, serving as a critical reference for determining acquisition cost. Pay close attention to the various risks highlighted by intermediaries during due diligence. Lawyers, accountants, and appraisers will raise concerns during the process regarding abnormal transactions, asset quality, ownership rights, and similar issues. The acquiring party must fully consider their opinions, discuss potential implications with the target company, and ultimately reach consensus. V. Gain Familiarity with the Target Industry When acquiring a company, the buyer must understand not only the target itself but also the broader industry—including its supply chain, sales channels, production processes, and internal management practices. Prior to initiating due diligence, the acquiring enterprise should establish a dedicated task force focused specifically on the target’s supply, sales, production, and internal management functions. This team should comprise specialists in procurement, sales, production, internal management, and contract negotiation—and ideally join the intermediary team on-site at the target enterprise to concurrently gather insights. Such coordinated engagement ensures better situational awareness and significantly enhances the efficiency and risk management of the acquisition process. VI. Scrutinize Contracts Not Yet Fully Performed by the Target Enterprise During due diligence, special attention must be paid to contracts entered into by the target enterprise that remain unfulfilled. Many acquisition disputes stem precisely from such incomplete contracts, warranting heightened vigilance from the acquiring party. To avoid acquisition risks arising from outstanding contractual obligations, the following review steps are recommended: First, examine the original contract documents to verify completeness of content and fairness in defining rights, responsibilities, and obligations. Any anomalies detected should prompt immediate communication with the relevant departments of the target enterprise and timely remedial action. For contracts subject to mandatory national standard templates, confirm compliance with applicable national regulations.

Ascent Industries Completes Acquisition of Midwest Graphic Sales and Sigma Coatings

May 6, 2026

Ascent Industries completed the $14 million acquisition of Midwest Graphic Sales and Sigma Coatings to expand its Chemicals-as-a-Service strategy. Q1 2026 net sales increased to $19.4 million, though gross margins declined due to new program onboarding.

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Ascent Industries Co. Completes Acquisition of Midwest Graphic Sales

Stock Titan

Ascent Industries Co. Completes Acquisition of Midwest Graphic Sales

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