Value Judgment Logic of Investment Institutions on Financial Distress Investments in Consumer Electronics Accessories Enterprises

Well-known investment institutions (such as Sequoia Capital, GSR Ventures) usually adopt a

when considering investments in financially distressed consumer electronics accessories enterprises. According to brokerage data and industry analysis [0], this value judgment logic mainly includes the following core dimensions:

• The core value of consumer electronics accessories enterprises lies in
  brand awareness
  and
  market share
  . Romoss, as a well-known brand in the power bank field, has mature brand assets and consumer bases, which are core elements concerned by investment institutions.
• The
  sustainability
  of brand value is a key consideration. Through 3C certification restoration and channel reconstruction, the brand can reactivate market value in a relatively short time.

• China has established a
  world-class supply chain system
  in the consumer electronics field, which provides unique restructuring value for distressed enterprises [5].
• The
  deep integration capability of supplier relationship networks
  is an important indicator evaluated by investment institutions. Through debt-to-equity swap schemes, supply chain partners can be transformed into a community of interests.

• The
  accumulated assets
  of online and offline sales channels (such as e-commerce platform relationships, dealer networks) can be quickly reused after restructuring.
• Data-driven user assets
  (consumer purchase behavior data)
  are of great value for product iteration and precision marketing.

• Distressed enterprises are usually invested at a
  significant discount
  , providing sufficient margin of safety for investment institutions.
• According to distressed investment theory, the
  deep discount
  of asset prices creates space for later value restoration.

• Through
  capital structure optimization
  and
  operational efficiency improvement
  , the real value of enterprises covered by distress can be released.
• The
  fast turnover rate
  of the consumer electronics accessories industry allows restructuring effects to be reflected in a relatively short cycle.

• The consumer electronics market has
  cyclical fluctuations
  , and the current distress may stem from the bottom of the cycle rather than permanent recession.
• Global M&A activities showed a
  strong rebound
  in 2025, with large transactions in the technology and media sectors driving market recovery [1].

• The expected easing of Sino-US trade relations may
  reduce supply chain costs
  and improve the overall profitability of the industry [7].
• Adjustments to tariff policies may enable
  low-cost consumer electronics products to regain price advantages
  [6].

According to industry practices [0], well-known investment institutions usually adopt the following strategies to create value:

• Reduce leverage ratio
  through debt-to-equity swaps and other methods to improve financial health.
• Reconfigure the debt maturity structure to match cash flow generation capacity.

• Introduce strategic investors to
  optimize equity structure
  .
• Design management incentive plans to
  bind the interests of the core team
  .

• Use the
  industrial resources
  of investment institutions to optimize the supply chain cost structure.
• Promote
  strategic cooperation
  with suppliers to improve synergy efficiency.

• Quickly restore 3C certification to
  reconstruct the product sales system
  .
• Optimize the online and offline channel combination to
  improve operational efficiency
  .

• Focus on
  high-margin product lines
  to improve overall profitability.
• Use brand assets to
  expand related categories
  .

• While maintaining brand awareness,
  enhance brand premium capacity
  .
• Through product innovation and service upgrading,
  reshape brand image
  .

As a

, debt-to-equity swap optimizes the capital structure by converting debt into equity. According to relevant financial theories [1][2][3], the key to balancing supplier interests and restructuring efficiency lies in the following mechanisms:

• The conversion price should be based on the
  enterprise’s fair value
  rather than book value.
• Adopt
  multiple valuation methods
  (income approach, market approach, asset-based approach) to comprehensively determine the conversion price.

• Design a
  tiered conversion scheme
  where creditors at different levels enjoy different conversion conditions.
• Prioritize the conversion needs of supply chain financial creditors to
  protect the interests of core suppliers
  .

• Set
  anti-dilution clauses
  to protect the equity ratio of suppliers after conversion.
• Grant suppliers
  preemptive subscription rights
  in subsequent financing.

• The part of supplier debt converted into equity can be designed as
  preferred stock
  with preferential dividend rights.
• In case of liquidation or exit,
  preferred stock enjoys priority claim rights
  .

• Grant
  corresponding board seats to suppliers
  according to the conversion ratio.
• Protect suppliers’
  right to know and right to participate
  in major decisions.

• Design
  multiple exit paths
  : (IPO, M&A, management buyback).
• Stipulate
  exit trigger conditions
  and timetables in the investment agreement.

• Allow suppliers to
  pledge their held equity for financing
  to improve liquidity.
• Establish an internal
  equity transfer platform
  to facilitate equity transactions between suppliers.

• Bind conversion with
  long-term procurement agreements
  to ensure supplier business volume.
• Establish
  strategic partnerships
  to enhance supply chain stability.

• Design
  performance bet clauses
  to bind supplier interests with company performance.
• Grant suppliers
  additional equity rewards
  when specific performance goals are achieved.

• Launch
  pre-restructuring negotiations
  before the formal bankruptcy process to shorten the restructuring cycle.
• Reach
  principled agreements with major creditors in advance
  to lay the foundation for formal restructuring.

• Advance in phases according to the timetable of
  landing in January 2026 and completing capital introduction in Q1
  .
• Prioritize
  restoration of key 3C certifications
  to quickly restart the sales system.

• Adopt a
  unified negotiation strategy
  to reduce multi-party coordination costs.
• Use the
  professional intermediary resources
  of investment institutions to improve negotiation efficiency.

• Implement
  tight operational policies
  during the restructuring period to control cash consumption.
• Reduce
  interest expenses
  through debt-to-equity swaps to improve cash flow status.

• On the basis of strictly following the
  absolute priority principle
  , appropriately consider the special status of suppliers.
• Give
  certain conversion preferences to core suppliers
  to ensure supply chain stability.

• Design an
  equity incentive pool
  to balance the interests of original shareholders and creditors.
• Grant
  representative seats to suppliers
  in the corporate governance structure to protect their right to speak.

According to industry case analysis [0], successful restructuring of consumer electronics accessories enterprises usually has the following characteristics:

• The brand maintains
  high awareness and reputation
  among consumers.
• Brand value has
  sustainability and extensibility
  .

• The management team and core technical talents
  remain stable
  .
• After restructuring, they can
  quickly restore operational capabilities
  .

• Major suppliers
  provide continuous support
  .
• Form a
  community of interests
  through debt-to-equity swaps and other methods.

• The consumer electronics accessories industry is
  fiercely competitive
  , and market recovery is uncertain.
• Response Strategy
  : Establish competitive advantages through product innovation and channel differentiation.

• Technological iterations such as fast charging and wireless charging may affect product competitiveness.
• Response Strategy
  : Increase R&D investment and keep up with technological development trends.

• Management synergy
  of suppliers after debt-to-equity swaps may face challenges.
• Response Strategy
  : Establish clear governance structures and decision-making mechanisms.

• Brand Value Assessment
  : Market position, consumer perception, brand premium capacity.
• Financial Status Analysis
  : Debt structure, cash flow status, profitability.
• Operational Capability Assessment
  : Team stability, supply chain integrity, channel recovery capability.

• Income Approach
  : Based on discounted expected cash flow after restructuring.
• Market Approach
  : Refer to valuations of peer listed companies and M&A transactions.
• Asset Approach
  : Consider the liquidation value of brand assets and channel assets.

• Complete comprehensive
  due diligence
  .
• Design a detailed
  debt-to-equity swap scheme
  .
• Reach
  preliminary consensus with major suppliers
  .

• Formally sign the
  debt-to-equity swap agreement
  .
• Complete
  capital introduction
  .
• Launch the
  3C certification restoration process
  .

• Reconstruct
  sales channels
  .
• Optimize
  product structure
  .
• Improve
  operational efficiency
  .

[1] Yahoo Finance - “How Does a Debt/Equity Swap Work?” (https://finance.yahoo.com/news/does-debt-equity-swap-160238102.html)

[2] Investopedia - “Debt Restructuring: What It Is, How It Works, and Key Types” (https://www.investopedia.com/terms/d/debtrestructuring.asp)

[3] Investopedia - “Equity Swaps Explained: Definition, Mechanism, and Real-World Examples” (https://www.investopedia.com/terms/e/equityswap.asp)

[5] Forbes - “China’s Ghost City Dividend: Building A World-Class Supply Chain” (https://www.forbes.com/sites/jonmarkman/2025/12/24/chinas-ghost-city-dividend-building-a-world-class-supply-chain/)

[6] Forbes - “Tariffs May Make Cheap Consumer Electronics A Thing Of The Past” (https://www.forbes.com/sites/greatspeculations/2025/04/30/tariffs-may-make-cheap-consumer-electronics-a-thing-of-the-past/)

[7] Yahoo Finance - “Items Set To Drop in Price Post-China Deal in 2025” (https://finance.yahoo.com/news/items-set-drop-price-post-120049851.html)

[1] Proactive Investors - “Global M&A rebounds in 2025 led by media, mining and tech megadeals” (https://www.proactiveinvestors.com/companies/news/1084950/global-m-a-rebounds-in-2025-led-by-media-mining-and-tech-megadeals-1084950.html)