That's right, backdoor listing.

The benefits of acquiring Apple have been said a lot in Bill Campbell's communication before, but there is another benefit that Zhang Chen did not say, that is, he can borrow Apple's shell to achieve listing on the NASDAQ.

Backdoor listing is one of the ways to go public, simply put, it means that an unlisted company realizes control of the listed company by purchasing the shares of the listed company, asset replacement, etc. Subsequently, the assets of the parent company that has not been listed will be injected into the listed company, and the financing will be carried out through the issuance of additional shares, so as to achieve the same financing purpose as the normal IPO of the enterprise.

The biggest advantage of backdoor listing is that it is fast, because listed companies need to go through a strict audit and listing preparation process, it often takes 1-2 years to prepare. Although the NASDAQ review is already fast, it will take at least three months or more.

For Zhang, the speed of review and approval is not the main benefit, but the Nasdaq's rigid requirement of at least two years of operation time for the company makes it impossible to list Matrix in the short term.

Matrix has grown so fast that it has only been a year since its inception, but it has already captured a considerable market share in the PC market, and it is still gaining ground.

This is a miracle achieved under Zhang Chen's strong financial support and supply chain management leading the entire market.

As a result, there is a very rare situation - all other conditions of the company meet the listing conditions, only the operating time is not met.

Waiting another year or two isn't a big problem, but at the end of '99 at most, the dot-com bubble will burst, and if there are a few twists and turns in the listing process of Matrix, it will be sad to delay it then.

What's the most important thing about going public? Circle money, ah no, it's financing.

Since it is a fundraising, the timing of the listing is very important.

In the case of the same performance, the timing of the listing is good, it is in a big bull market, and it is the same as playing with 20% or 30% of the funds.

But if the timing of the listing is not good, it is a stock market crash, then it is better to simply postpone the listing, maybe the market investors are not willing to sell, for fear of smashing in their hands.

Therefore, Zhang Chen must seize the year before the Internet bubble bursts to realize Matrix, so as to circle money, ah no, financing to survive the winter.

Time is money, time is life, and backdoor listing can save time for the listed company, which is the biggest advantage of this method. However, the reason why backdoor listings cannot be widely popular must have many drawbacks.

First of all, the equity dilution is serious, and the backdoor listing is equivalent to the merger of two companies into one due to the structure itself, and in addition to facing restructuring, the equity ratio of the original controlling shareholder of the proposed backdoor company will be further diluted. Due to the dilution of the shareholding ratio, it also reduces the space for subsequent capital operation.

Secondly, the quality of the shell company is not good. It's very simple, which shell company operates well, and it won't be sold out. If you want to become a shell company, it is often an inferior company with a lot of problems, and dealing with these problems will consume a lot of time and capital costs of the proposed backdoor company.

Thirdly, integration is difficult. Needless to say, this is true.

Finally, due to the scarcity of listing qualifications, the shell company itself has a certain value, forming a seller's market, resulting in inflated prices and increasing the cost of listing.

But these shortcomings are not a problem for Matrix at all.

Equity dilution does not exist, Zhang Chen originally wanted to merge and acquire Apple in the form of cash + shares, and now 100% of the equity is in Zhang Chen's hands, but it is only nominally dispersed to Zhang Chen's several offshore investment companies. Even if 30% is used for equity swap, the deal is not a loss.

The quality of the shell company is not good? It is true in the eyes of outsiders, but in Zhang Chen's view, there is no better shell than Apple. Although Apple's current operation is a mess, the technology and talent pool is excellent, and as long as the product and supply chain are in good hands, the company will quickly come back to life.

Haha, Jobs has already killed eighty or ninety percent of Apple's silverfish, and the rest are elites, no matter how difficult this integration is, how big can it be? And the values of the two companies are very close. Integration? No, there is no difficulty in integration.

The cost of listing is high, and it doesn't exist anymore. Other shell companies may have this problem, but for a company of Apple's size, where are the additional costs and oddities?

Who can treat a $3 billion company as a shell company? There is no such cost in Apple's market capitalization today.

The only thing that may be a little troublesome is that Apple's shareholding structure is somewhat unfavorable.

A slight comparison between Apple's shareholding structure and that of listed companies after the 21st century shows that entrepreneurs' perception of initial equity distribution is constantly evolving.

Initially, Apple was owned by Steve Jobs and Wozniak at 45 percent, and by a brother named Lowenian at 10 percent. It didn't take long for Wayne to think that the two men were fools, worried that his money would be wasted, so he withdrew his shares, and Jobs bought Wayne's shares for eight hundred dollars.

After some time, the famous Makula joined in and invested nearly $100,000, at which time the company still had three shareholders, each of whom owned 26 percent of the shares, and the remaining 22 percent of the shares were intended to attract new investors.

But the financing plan did not go so smoothly, and no new investors came on board. After the company was officially established, new employees were recruited, and at this time, the equity became 30% for Jobs, Woz, and Makula, and 10% for another new engineer.

From here, it can be seen that Apple's original equity design, although it had the presence of the business elite Makula, adopted an initial equity design that was considered the worst in later generations - equity equalization. This was also the root cause of Jobs' expulsion from Apple in the future.

Within two years, Apple was thriving and began its IPO, and after going public, Jobs was the largest shareholder with a 15% stake, Makula was the second largest shareholder with 11.4% and Wozniak held 6.5%.

As one of the founders, Wozniak held such a small shareholding, in addition to the dilution of the shares due to the listing, a very important reason is that in the weeks before the listing, he took out one-third of the shares and distributed them to the company's engineers, so that everyone can achieve common prosperity.

What a nice guy。。。。。。

Apple's top three shareholders have less than 30 percent of the shares, and the remaining 70 percent are in the stock market. Later, Jobs sold all his shares, Wozniak divorced three times, there was not much stock left, and Marcula only kept a small part of Apple stock, and after Jobs returned, Marcula quit the Apple board of directors and almost emptied his shares.

In addition, due to the decline in Apple's performance, many large institutions have successively reduced their holdings of Apple shares, resulting in 90% of Apple's shares in the circulation market, and the equity is too dispersed, which increases the difficulty of acquisition.

Buying stocks from the open market can easily form a herd effect, and if you maliciously suppress Apple's stock price for acquisition, and you are suspected of manipulating the market, it is much more difficult to operate.

If you want to buy a shell, you must first buy a shell, and Matrix's acquisition of Apple is the first step in buying a shell.

"Now that Jobs controls the entire Apple board, six of the eight people he named, and even if Ed agrees, your cash-and-stock offer will be rejected by the board of directors as long as Jobs objects. Are you confident that you can handle Jobs?" Michael Moretz knows Jobs very well, and knows very well that with Jobs's character, it is impossible to accept the outcome of Apple going bankrupt rather than being acquired by Matrix.

A slight smile appeared on the corner of Zhang Chen's mouth: "That's Ed Woolrad's problem, if Apple's board of directors really rejects Ed Woolard's proposal, it means that this board of directors has become Jobs' personal supporter and cannot make decisions that are best for the interests of shareholders, I hope that Ed can convene a shareholders' meeting at that time to impeach the board of directors and vote on the acquisition." ”

Michael Moretz blinked and suddenly smiled: "What do you do if the extraordinary shareholders' meeting can't be held smoothly, or the merger and acquisition vote is not passed?"

Zhang Chen laughed twice and didn't speak.

Michael Moretz leaned over and said meaningfully: "If the shareholders' meeting is not passed, if you want to buy Apple, you can only take the road of hostile takeover, right? No, your original plan was to make a hostile takeover, and now how many Apple shares do you already hold in your hands? 1 million shares or 1.5 million shares?"

Zhang Chen showed a smile: "Why do you think so?"

Michael Moretz confidently said: "Apple's shareholding structure is too fragmented, even after the approval of the shareholders' meeting, you want to merge with Apple through a share exchange, you need to pay too much equity, so much that after the issuance of new shares, you may even lose the controlling stake in the new company." Frankly speaking, after dealing with you for so long, your obsession with equity is far greater than cash. I don't believe you'd take that risk in order to buy Apple. ”

Speaking of which, Michael Moretz paused: "And, in the last two months, Apple's turnover rate has increased by seven percent. I wondered that even if Apple's OS8 was successful, the turnover rate should not have increased so much, and it would continue to grow. Originally, I thought that Apple was deliberately pushing up its stock price in preparation for the issuance of new shares. Now it seems that you are just sucking chips, right?"

Zhang Chen laughed and said: "Michael, you are very sharp, you guessed right, I have indeed been slowly absorbing Apple shares in the past two months." After all, it's unlikely that you'll be able to pass Jobs' level. However, neither a million shares nor a million and a half million shares. ”

Michael Moretz's pupils shrank, and Zhang Chen stretched out his left hand, "50 million shares, all of them are ordinary shares." ”

Michael Moretz lost his voice and said, "50 million shares, you already have 10 percent of Apple's shares?"

Zhang Chen nodded: "Yes, a total of 330 million US dollars was spent, and now these shares are scattered among thousands of accounts, and they have all signed an agreement with Matrix, and they can be closed when the time is right." ”

Michael Moretz gasped, but he didn't expect that Zhang Chen had accumulated so many chips without making a sound, it seemed that Zhang Chen was bound to win Apple.

But in this way, there is no need for Sequoia and Koch brothers' previous investment plans for Matrix.

10% of Apple's equity is enough to jointly launch an extraordinary shareholders' meeting, and as long as the shares of shareholders participating in the voting exceed one-tenth of the total share capital, the vote will be valid. As long as two-thirds of the voting equity shareholders agree, the merger and acquisition can be passed, so it seems that under the minimum circumstances, Zhang Chen only needs to obtain another 7% of the equity, or obtain the consent of 7% of the equity, and the merger and acquisition can be smoothly implemented.

Of course, if there are more shareholders participating in the voting and the proportion of equity is larger, then Zhang Chen needs to obtain more equity and shareholder support. In terms of insurance, he needs to get at least another 10% equity to be more secure.

It also reduces the dilution of the combined shares.

Three to four hundred million dollars.

Don't...... Michael Moretz glanced at Zhang Chen suspiciously, could this kid want to 。。。。。。

Zhang Chen snapped his fingers and said with a smile: "Michael, it seems that you have also figured it out, I still need at least ten percent or more of Apple's shares before this acquisition can be considered insurance." I now have two new proposals for a partnership that are just right for Sequoia VIII, would you like to hear about it?"

Michael Moretz took a deep breath, vaguely guessed what Zhang Chen wanted to say, and nodded, "You say." ”

Zhang Chen stretched out his right index finger: "The first plan is for Sequoia to come forward and acquire 10% of Apple's shares, with an estimated total cost of about 350 million, and Sequoia will grant voting rights to Matrix or my designated shareholders." In this way, after the acquisition, the stock price of the new company will inevitably rise, and Sequoia will be able to make at least 20 percent more profit from it. ”

Michael Moretz touched his chin, this is exactly what he thought of before, after hearing the inside information that Zhang Chen wanted to buy Apple, Moretz had already made up his mind to increase his holdings of Apple. But it's also risky, and if Zhang Chen changes his mind, or if some force majeure event fails to make the acquisition, then Sequoia will have a lot of fun. From being locked up in seven million to being locked in three and a half billion, there will be no place to cry when the time comes.

"I'd like to hear about the second option. Michael Moretz asked in a deep voice.

Zhang Chen smiled: "The second plan, Sequoia No. 8 Fund provides Matrix with a total of $350 million in two-year mezzanine financing, and x promises a total of 20% of the return on this debt. If the acquisition of Apple fails, the proceeds are not guaranteed, and Matrix defaults, the $350 million can be converted into corresponding interests in Matrix. ”

Michael Moretz frowned: "Mezzanine financing?"

Zhang Chen smiled and said: "This not only ensures the safety of Sequoia No. 8 Fund's returns, but also meets the Koch Brothers' requirements for investing in Matrix, what do you think?"

Mmmmmm, it's done。。。。。。。

(End of chapter)