No such thing as a risk-free M&A bet

Shenzhen-listed Jiangsu Changfa Refrigeration Co Ltd surged by the 10 percent daily limit for nine consecutive trading days between October 31 and November 12, thanks in large part to its involvement in a planned merger.

Such deals have become commonplace in the A-share market this year. Over the past several months, more than 200 mainland-listed companies have been suspended from trading for major issues; mostly involving mergers and acquisitions (M&A), asset restructuring and backdoor listings.

Statistics from the China Securities Regulatory Commission show that during the first three quarters of this year, listed companies participated in 668 M&A deals involving a total disclosed sum of over 1 trillion yuan ($163.26 billion), exceeding last year's total value.

Moreover, as shares of companies involved in such restructurings usually skyrocket once trading resumes, individual investors tend to be speculate on stocks that might be bought out. Yet the potential for high returns come, naturally, with high risks.

Concluding an M&A deal is never a sure thing, with uncertainties and potential deal breakers looming step of the way.