Seventh Avenue: Double Lessons from Equity and Voting Rights

After the acquisition, what happened between the founder Cao Kai and the tour of the unknown story? Cao Kai introduction of the most important reason for the tour is listed on the article | Zhai Wenting May 2, Cao Kai has been holding something that has been packed, Out of Seventh Avenue. His mood is very bad. As Changyou just announced, it has already signed an agreement with the former management shareholders of Seventh Avenue to acquire the entire 28.074% of the management's shareholders' equity. Prior to Changyou has controlled 71.926% of its shares, so the acquisition ended, Seventh Avenue will become a wholly owned subsidiary of Changyou. Cao Kai submitted his resignation to the board of directors the day before and was approved. In other words, although as the founder of the Seventh Avenue, but later this company has nothing to do with Cao Kai. 10 days later, I met Cao Kai in Shenzhen. He was calm and relaxed and occasionally sucked in a cigarette. But before deciding whether to completely leave the seventh avenue, he is insomnia every day. After arduous journey to the Seventh Avenue, "Bouncing Church", "Divine Comedy" made the pageant tour of the country, he could not bear to leave. And even if the original introduction of swim, give up control, he never thought of leaving. In 2011, Changyou acquired 68.258% equity interests in 7th Avenue. The transaction price includes a fixed cash consideration of 68.26 million U.S. dollars and a floating excess cash consideration of up to 32.76 million U.S. dollars. Under the agreement, if Seventh Avenue's performance meets the agreed standards and Seventh Avenue completes its initial public offering on the Nasdaq, NYSE or Hong Kong by 2014, its non-controlling shareholders have the right to hold The shares are sold to Changyou at a pre-agreed price, and the put options will expire in 2014. In other words, there is a bet behind this merger. Content involves two aspects, one is income, the second is the listing. Cao Kai told "Entrepreneurial State," the actual revenue of the seventh Avenue more than a little more than the requirements of Changyou. Changyou 2013 Q1 earnings report also shows that the seventh Avenue Q1 for the tour contributed a revenue of 216 million yuan, accounting for 21% of total tour revenue. Obviously, the performance is not a problem. And on the market, after reports that Seventh Avenue in 2012 in the form of confidentiality submitted to the NASDAQ prospectus. Cao Kai confirmed that there is indeed this matter, but also revealed that the listing has gone through the entire process, the poor go to the Nasdaq bell this step. All abrupt end. Seventh Avenue did not successfully listed independently, on the contrary, in a year from the two sides agreed deadline, and the gambling agreement is not fully implemented, Changyou completed ahead of the acquisition of the Seventh Avenue. Cao Kai soon has its own new destination, start again, start a business to do the old game, or the page tour. Why sold to Changyou? March 2009, "Bouncing Church" on the line, the first month of 180,000 yuan water flow, sub-finished accounts, withholding tax, the real get only 80,000 yuan hand. Cao Kai quickly give you a salary. This is the first money he has earned since he started his career in November 2007 after he transformed from a failed university campus real estate community project. Cao Kai is still very short of money. In April, he met an angel investor Wang Yuan through a friend, and Wang Yuan gave them 100,000 yuan, accounting for 15% of the shares. At that time, the shares in the eyes of Cao Kai not what valuable things for the company to survive, this thing can continue to do this is the most important. He went to Shenzhen Entrepreneurship Competition, only to win 50 million bonus. A few months later, Zeng Li Qing also came in, introduced by Wang Yuan. He spent 400 million yuan, in exchange for 20% of the shares. Turn Woong Wo Capital and Shenzhen Innovation Investment, 10 million yuan only 10% stake. This is all happening within a year, when Seventh Avenue was the only one game "Bouncing Church", the company's growth rate is staggering. Vietnam companies take the initiative to find their way home, to proxy "Bouncing Church." The money behind the two VC has been lying on the account, Seventh Avenue has no need to worry about money. The company developed well, Cao Kai sprouted the idea of ​​making companies listed. The first time this idea was in October 2009, when a domestic game company listed on the A-share GEM, Cao Kai think this is a chance. However, I did not expect that after the listing of the company PE has shrunk dramatically, game companies in the domestic market window gradually closed. But the Seventh Avenue has always been taking the RMB funds, that is, purely domestic-funded companies, to be listed only in the country. And troublesome, the company's shareholders have inflated to 10. Cao Kai, including the company's management has four shareholders, Wang Yuan, Zeng Liqing and two VC, in addition to thank Wang Yuan introduced that friend, Cao Kai gave him 3% of the shares; Wang Yuan introduced Before Li Qing, also pulled in an angel voted 400000 yuan. Cao Kai is the largest shareholder, holding 40 percent, the remaining shares of these people are only about 10 percent, almost the same. Mixed people, everyone on the company listed on the issue of different attitudes. And Cao Kai's judgment is that "we have more projects on hand and there is no special all-out effort to promote the Seventh Avenue to go public." At that time, Cao Kai had two goals, one is to be a listed company, and the other is to build a building in Shenzhen, called Seventh Avenue. Perhaps it is always done the Internet's sake, he always felt that dealing with the virtual world, and life should always leave something. "There is a building of my own, with my logo on it and all our thoughts in it, that feeling really good." But the land in Shenzhen is not easy to get, and this goal is going away with him. Listing is not out of reach. He began to consider the introduction of a foreign background capital, Huaxing Capital Bao who assumed the FA's role. In fact, there are not many alternatives left to them. RMB funds to the dollar fund, justifies justified, but most of the fund has no interest in the Seventh Avenue. So they focus on the introduction of mergers and acquisitions parties, giants, the perfect is to consider the object. Finally, Cao Kai chose Sohu's tour. "The 7th Avenue is very much like the concept of a swim." Everyone focused on R & D, respecting people, being humanized, and paying special attention to the product experience. "On April 25, 2011, Changyou announced the acquisition of 68.258% equity interest in Seventh Avenue. At that time, "Bouncing Baptist Church" was one of the best web games in the country. It was translated into 9 languages ​​and operated in many countries and regions such as Vietnam, Taiwan and Brazil. The monthly income of over ten million yuan, but also in the same year became the first monthly income of billions of pages of travel. For those who have always relied on tour of the tour, this makes up for their shortcomings. For old shareholders of Seventh Avenue, this is also a good exit. Cao Kai said: "With the cooperation of the Seventh Avenue, or stake in the Seventh Avenue, not a losing money, all earned." Wang Yuan had invested 100,000 yuan, more than a year has changed Into 70 million yuan. As for Cao Kai and Seventh Avenue, he feels closer and closer to his dream of going public. Behind the tour is Sohu, two domestic companies listed overseas success rare, which makes Kai Kai very excited. "Their experience is too rich, the resources are also very rich, investment banks, investor relations are also very rich." To put it plainly, we find Sohu with the tour of the investors, is willing to buy our stocks, it is not difficult. Seventh Avenue does not mean that like Facebook to do tens of billions of dollars so big plate, to do a few hundred million, the pressure is not great. "Everything seems to be moving towards the ideal of Cao Kai on the signing of the lock-up period, let Out of equity and other terms indifferent. Because he never thought to leave. "One hand, painstakingly managed from 5 individuals to the team of seven or eight hundred people, why go? Where? Never thought of it." "I am not suitable for working" Cao Kai was born in 1982 often labeled "Ashes-class player." He started playing games at the age of 5, from TV, arcade, handheld to online games, mobile games, etc., no teacher, get started quickly. When he was in junior high school, he taught himself the Microsoft system engineer MCSE and Cisco network engineer. In spite of this, his work experience is not related to the game. Very simple, he always felt that the game is simply a hobby, never thought to make money from it. After graduating from college, Cao Kai's first job is to do a business expansion in the A8 Liu Xiaosong, 2,500 a month. At that time A8's main business is the SP, rather than later listed on the music story. He later jumped to a company doing P2P downloads and music. Cao Kai was accompanied by a colleague with the A8 interview, the results of the other two people feel good, they all left. Cao Kai still has a heavy financial burden. He sends 1,000 copies a month for his sister to study in the home. The other side's monthly salary of 7,000 yuan makes him unable to refuse. Cao Kai was only 23 years old at that time, is the head of the design department, with more than 20 people under the hand. The third job in Ai Shide for Cao Kai accumulated entrepreneurial start-up capital. The foreign-funded company in Beijing, Shanghai, Guangzhou and other places have branches, Cao Kai is the Guangzhou Branch COO. This job also made him realize that he is not suitable for working and can no longer work. "My working experience has not worked very well and I was always marginalized and pushed out by my direct leadership." At the time, the company was the general agent of Samsung mobile phones in China. In other words, all Samsung mobile phones into China, their first hand. Disassemble the box, stuffed into a download, and then cover the box, but also do the SP. Cao Kai responsible for nationwide promotion, he Jiangxi, Shanxi, Zhejiang Province three TV stations get the time, free play their products, and then divided into each other. Once, the chairman of the group came to the meeting and sat at the table looking at the projector. Cao Kai just sitting on the other side of the edge, all reporting colleagues are playing next to him PPT. He saw that almost everyone's hands trembled nervously. "It is possible that several of their departments did not make any profit." Cao Kai is different, and his emboldenedness is relatively hard. The result, the boss approved a pass other people, only exaggerated Cao Kai a few words. Since then, his direct supervisor reversed his position, consciously or unconsciously restricted Cao Kai - "Every day to talk to me." The result is that Cao Kai out of their own business. A similar thing, Cao Kai also encountered in the A8. As for the reason, he also has an analysis: "At that time, I was young and I always wanted to be recognized by others and recognized my abilities, so I felt that I could show more opportunities to get more opportunities. Cao Kai categorized himself firmly into the category that is not suitable for working. "The process is too tortuous, causing me to be scared and insecure." Cao Kai, on the other hand, is a product-driven talent, so he admits that he is paranoid and strong, but for numbers, his income is slim. Early Seventh Avenue made some less-than-correct decisions or designs in the game for fear of making money, and some interactive designs were made when the second version of Bouncing Hall was made.We do not want to make money And do these things, but more to consider the player's experience. "" Bouncing Church "is in the" crazy tank "," Adventure Island "based on innovation. Character design is more refined, the style is more refreshing. "To do the product to the limit, do not give yourself leave, this thing is endless, do it to the dead, so I do not know how to do, I almost collapsed, no problem can be seen at this time What to do? Look for others to look for more people to help me find the problem, improve the problem, and finish it endlessly instead of making it perfect and better. "Cao Kai said. There is also a small incident to prove his harsh and paranoid product. Changyou 2011 Holdings, the management team sold some shares, Cao Kai realized the financial freedom. He bought his first home for the family - had been renting, but he has not checked in yet. Decoration lasted two years, delay in completion. The reason is that Cao Kai requirements are too harsh, that where not perfect, we must reinvent. Cao Kai energetic. He also hired five workers at the same time because of financial difficulties at home. Even now, he still sleeps 5 hours a day is enough, 2:00 to sleep, 7:00 woke up. Daily life is very simple, direct drive to work from the basement in the morning, one or two at night under the basement. "It's not an exaggeration to say that I do not know where the front door opens and never walked." His favorite sport is basketball. A friend comment, he is a born entrepreneur. Wrong? Misunderstanding? 2011 Changyou mergers and acquisitions of Seventh Avenue, the latter basically maintained an independent operation and management. Changyou did not send any executives, and the team at Seventh Avenue was basically stable. Employees saw Cao Kai working overtime to one or two points as before. Before and after the merger no change. Cao Kai told the team: "We choose to take a dip, take a dip and choose us, the goal is to go public." As with the tour's performance of the betting, which has been no challenge to them, they have been fulfilling their original commitment, and more than the original The goal. Open the board of directors are very simple and quick, open the report, watching the rise of the curve, we said with satisfaction: "Well, let's go eat." The end of 2011, Seventh Avenue also introduced the second product "Divine Comedy, This is a magic class games, with the "Bouncing Church" is completely different style. In addition, in the past two years, they are doing all the preparations listed. Prospectus, Investment Bank, ICEC Commission, etc., including road shows are done. Finally, the boss of NASDAQ headquarters in the United States came over and took Cao Kai's hand and said: "The Nasdaq welcomes you." Everything is ready, and the only difference is the NASDAQ bell. But the sudden change of direction, Cao Kai changed his mind, he did not want to go public. There are two reasons. First, after the listing of the company's performance requirements, not like now with the tour of gambling so simple, it will allow companies to endless vicissitudes of interest, but contrary to the original intention of doing the game - just want to make everyone happy. Second, he has lost control of the company, even if the listing is successful, the seventh Avenue also belongs to the Changyou not founding team. "So I became a professional manager of shares, and turned into a working, and I said I can not work, not suitable for working." Cao Kai said. The problem came, the seventh Avenue was Changyou Holdings as early as 2011 to determine the fact that Cao Kai was not aware of it? He said there was a misunderstanding. "We have been in contact with investors before they are gone, the seventh Avenue or us, so the first time Changyou mergers and acquisitions of Seventh Avenue, we think so." In other words, Cao Kai is only a more smooth swim Understand the game has the resources background of the dollar fund investors. They signed a merger agreement, the reason why the first tour to buy 68.258% stake, is to ensure that listed shares diluted after the tour is still to be controlled. Because Changyou has been stressed that listed companies should be consolidated, which is not a problem for Cao Kai. "Merger and consolidation table, the control is owned by the controlling, the voting time to me." There are betting between them, which appears to Cao Kai is also normal, to do the performance well, through the actual action Reflect the value. "We did it and their investments depended on it, and they returned the company." Around September 2012, Cao Kai thought the time had come to talk about the "return of control" issue. This must also be done before listing. When the 2011 merger, Changyou and the management of the seventh Avenue, the voting ratio is 3: 2, so Cao Kai then asked to get another vote, the vote is the key, is decisive. Obviously, Changyou will not agree, there is no reason to agree. Cao Kai suddenly realized that the original tour is a control in the end, will not go, "others want to own this company." As a result, Cao Kai do not know what to do. We all sit down to discuss the solution. Cao Kai has come up with many options, including a plan to buy back some shares, but none passed. Until more than a month ago, Changyou put forward this program now, complete the full acquisition. Their starting point is also very simple, since Cao Kai already have other ideas, the heart is no longer afraid of the things behind do not do well. In order to ensure the stability of the company and the team, the founder to leave is the most rational solution. On May 2, employees of Seventh Avenue received a message that Changyou announced the acquisition of the remaining equity interest in the management of Seventh Avenue and the departure of Cao Kai. Changyou president Chen Deli will serve as chairman of the Seventh Avenue, acting CEO, the original COO Meng Zhiyun continue to stay. "This thing up to now, may not swim, do not believe it, no one said to others, I was really think so. You see my behavior will know, if not so, these two years I am so dry Well? Not because it is their own company? "Cao Kai said. Of course, for the whole thing, he had no comment on the tour. On the contrary is very lucky to swim, all the acquisitions, the other party to fulfill its promise at the time. And Changyou did not sign him to compete agreement, that is, he left the seventh Avenue in any industry can be. "The main responsibility for this matter is still with me, did not say in the agreement." Leave Seventh Avenue, Cao Kai is preparing his new company, or travel. He does not want to say more, feel that things have not been done, everything is empty talk. As long as he has time to play basketball, but the play is different from before. "Before my own score is the most cool, feel a sense of accomplishment, very enjoyable now is not, I think the passing is the most fun I do not have to throw, but my teammates can throw it in, and I do not point it does not matter . "Cao Kai M & A experience can not be fully shared choose the right object will succeed, because this matter is too large a variable. The two teams merge, do not look anything else, is to see people. People are the most complex individuals, creatures, a group of people to be together, this matter will have a lot of possibilities, not necessarily because of what, human temper, habits, values, are possible. 1, mergers and acquisitions must fully trust the merged team. Believe it when you buy it, do not change it. Independence is very important, you do not have to manage it. 2, complementary. You buy the best thing you understand, that is, do not buy you do not understand, mergers and acquisitions side has been acquainted with the acquired party, unsurprisingly, this is very difficult to do. 3, or to have performance requirements, that is, gambling. Although I do not value this thing, I never doubt my team, but there should still be such a request. Phased goals are also important. 4, respect. Mergers and acquisitions must fully respect the opinions and ideas of the acquired party, and do not impose their own things on it.