Journey 1995:Non-Stop

Chapter 324 Selling the Company

Yan Hui originally thought that since his company was a high-tech company and government leaders were willing to help, it would be a simple matter to use the steel formwork company as collateral for a loan.

But after actually trying it out, he found that it still didn't work.

In that case, he would have to sell everything he owned and then mortgage the factory to buy equipment.
In other words, when the factory started production, he actually had no assets at all; everything belonged to the bank, in addition to the 420 million yuan investment from his cousin and brother-in-law.

Competition in the steel formwork business has been fierce in recent years. If his chemical plant fails, he will have almost no way out.

However, there is also good news—he never really owned anything to begin with.

The steel formwork company has grown to over 500 million yuan in assets, but it faces fierce competition. In Yan Hui's surrounding area, he knows of seven or eight competitors, three of whom are quite powerful. All three of these companies have a history of conflict with Yan Hui.

The leasing industry is capital-intensive but offers high returns, and most people in this field have some social connections, such as Mr. Ma, who leases cranes and construction machinery. Yan Hui was able to build his steel formwork company because of a certain market gap that had existed in recent years.

Nowadays, with a large influx of funds, several conflicts of varying sizes have occurred on the outskirts of the area "controlled" by Yan Hui. If it weren't for Yan Hui's plywood production lines and processing plant lines, and the fact that he has the Jian'an Group as a powerful backer, he would have encountered real conflicts long ago.

Those in the same industry are definitely enemies!

With this in mind, Yan Hui began to consider who to sell his company to.

The area Yan Hui was familiar with involved three districts of Jinan. The largest steel formwork rental company, owned by a man surnamed Zhao, was originally in the steel business and was quite powerful. It rented out approximately 5000 tons of steel formwork, worth around 1400 million yuan.

The other two companies are at a similar level to Yan Hui, but these two bosses do not only run steel formwork businesses; their assets are both over ten million.

The two bosses behind them, one surnamed Sun and the other surnamed Qian, are from the same region as Yan Hui, and are also the ones with the biggest conflict.

According to Yan Hui's judgment, what he wanted most in this area was Boss Qian. If Boss Qian could take over Yan Hui's area, then his controlled areas would be connected, and his strength would soar rapidly. However, Yan Hui and Boss Qian had a major conflict, and he did not want to sell to Boss Qian.

Yan Hui's current company can only be sold to competitors. Even banks don't know how to value it, and neither do laypeople. The industry peers know best that it offers at least a 30% annual return.

After careful consideration, Yan Hui approached Wang Yongjun and discussed the matter in detail.

"Boss, if the company is sold, will you still need me in the chemical business? I don't know much about chemicals, but I still think working for you is more promising." Wang Yongjun was the one who had been with Yan Hui the longest, and he was the most anxious when he heard that Yan Hui was going to sell the company.

"The plywood business will still depend on you; I'm too busy to handle it all. As for the chemical business, I guess it's out of the question; it's more specialized. But Lao Wang, plywood is still very important to me. From now on, I'll focus my main efforts on the chemical business, and I can set up a company for plywood and have you manage it." Yan Hui needed to keep his key personnel in check during this period.

“Boss, I’m your soldier anyway. Just call me anytime if you need anything.” Wang Yongjun didn’t waste any words.

As the business manager, Wang Yongjun was responsible for promoting plywood and steel formwork, so he had the deepest understanding of the surrounding area.

Yan Hui talked with him for over half an hour, gaining a deeper understanding of the three competitors. "I think Mr. Zhao wouldn't actually want our company. He's in the steel business, and his cost of finding secondhand steel isn't high. If we sell everything here as secondhand steel, we'll lose a fortune. Our company's most valuable asset is its business scope. Mr. Zhao is the furthest from our region, and cross-regional management is inconvenient for him. If we talk to him, we can only negotiate secondhand steel prices at most," Wang Yongjun offered his advice.

“That’s what I think too. He’s already a big company that attracts a lot of attention, and this sudden takeover will cause us a lot of trouble.” Yan Hui nodded. “So, who do you think is more suitable, Mr. Qian or Mr. Sun?”

“These two companies have adjacent areas, and they both have a lot of conflicts. Mr. Sun started out as a subcontractor and has good relationships on construction sites, so he definitely has the ability to take over this area. But as you just said, Mr. Qian definitely wants this area the most.” Wang Yongjun understood the situation quite well.

“Okay, then I’ll go talk to Mr. Sun. You can release the news soon. Just tell the truth: my chemical plant investment needs about 3000 million, and I’m considering selling some to raise funds,” Yan Hui said.

"Huh? Tell the truth?" Wang Yongjun asked, somewhat puzzled.

“A deal worth millions can’t be kept secret. Every boss has some government connections. They’ll find out everything over a meal. The more honest we are, the less of a problem we’ll have. For us, the chemical industry is an opportunity, and for them, acquiring our steel formwork company is also an opportunity.” Yan Hui was still prepared to play his cards openly.

Regardless of the reason, using the proceeds from the sale of assets to invest in other assets is a perfectly valid reason for asset sale. It's a hundred times better than reasons like bankruptcy or a lack of prospects in the industry.

"Yeah, I understand."

After Wang Yongjun left, Yan Hui found Zhou Ping, and the two of them conducted a thorough audit of the steel formwork company.

During the audit, he also discovered that some sales staff had violated regulations by accepting invitations to meals, but Yan Hui pretended not to see it. Such things are absolutely unavoidable, so there's no need to bring them up.

Currently, the company has approximately 700,000 yuan in deposits and over 200,000 yuan in cash. In addition, the company has 2106 tons of steel formwork leased out. There is also some scrap steel, valued at approximately 300,000 yuan.

Based on a price of 2500 yuan per ton, the value is approximately 520 million yuan. Including cash, the company's value is over 570 million yuan.

In recent years, steel formwork companies have also caught up with the times. When Yan Hui bought the company, steel formwork was basically priced at 1800-2100 yuan per ton. Now that steel prices are rising, the company's valuation has also increased accordingly.

About two weeks later, the local business owners all heard that Yan Hui's company was going to be sold.

During this period, several business owners with assets exceeding one million yuan approached Yan Hui, wanting to buy some second-hand steel formwork. They offered around 2300 yuan each, but Yan Hui rejected them all.

He can't sell it for less than 2500 yuan per ton, so he has to hold steady at this point.

He left a winter for the sale, which gave him ample time and allowed potential buyers time to raise funds.

After being rejected by the previous business owners, Mr. Sun finally took the initiative to come to their door with his people.

(End of this chapter)