Li Yanhong's "strong external aid" is in place - "merger queen" Liu Xiaodan enters a new battlefield

On February 24, 2025, Baidu Group announced a significant appointment: Liu Xiaodan officially replaced Brent Callinicos as the company's new independent director and chairman of the board's audit committee, effective February 23.

This news has stirred up a storm in the venture capital field, attracting widespread attention and discussion.

The "Queen of Mergers and Acquisitions" is now aligned with Baidu.

On this day, it was only 48 hours since Baidu announced its acquisition of YY Live for $2.1 billion, and just two weeks since the Wenxin large model fully integrated DeepSeek technology.

From the outside, this personnel change is not only an optimization of Baidu's governance structure but also implies Li Yanhong's determination to break through in AI strategy.

The Queen of Mergers and Acquisitions Joins Baidu

As 2025 began, the technology investment sector was buzzing with topics, with projects like "Yushu Technology" and "DEEPSEEK" becoming industry focal points. At a private enterprise symposium, the C-position report by Yushu Technology founder Wang Xingxing allowed the industry to keenly capture the immense potential of this company. Meanwhile, discussions about the participating companies gave rise to a quip: "Who went is not important; what matters is who didn't go," implying the challenges faced by Baidu in the AI wave.

As one of the earliest internet giants to systematically lay out AI technology in China, Baidu seemed to find itself in an awkward position at the beginning of 2025, struggling with the "first-mover advantage being challenged by the later waves."

According to Baidu's 2024 financial report, total revenue for 2024 reached 133.1 billion yuan, with a net profit attributable to Baidu's core of 23.4 billion yuan, a year-on-year increase of 21%. The report indicated that in December 2024, the daily call volume of the Wenxin large model reached 1.65 billion; in the fourth quarter, intelligent cloud revenue grew by 26% year-on-year.

Despite overall revenue growth and a significant increase in the daily call volume of the Wenxin large model, the stories of DeepSeek reaching over 100 million users in just seven days and Yushu Technology's high-end robotic dogs sweeping the consumer market led the market to begin questioning: Has Baidu, which once shouted "All in AI," fallen behind in the tide of technological iteration?

"2024 is a critical year for us to shift from an internet-centric approach to an AI-first approach. As our full-stack AI technology gains widespread market recognition, the growth momentum of intelligent cloud becomes increasingly strong. In the mobile ecosystem, we have consistently pushed for the AI-native reconstruction of search to enhance user experience," said Baidu founder, chairman, and CEO Li Yanhong. "As our AI strategy continues to be validated, we believe that investments related to AI will yield greater results in 2025."

"Theoretically, Baidu lacks technology, but in this wave of AI, it has clearly not sparked any fireworks and is gradually showing signs of fatigue," admitted an investor Industry insiders point out that from the perspective of financial strategy and investment layout, Baidu is at a critical stage of diversification transformation, making significant investments in the fields of autonomous driving and smart mobility. The joining of Liu Xiaodan is expected to bring profound changes to Baidu.

On one hand, by leveraging the "merger + incubation" model, it will help Baidu integrate resources in the autonomous driving sector (such as potential acquisitions of car companies) and AI chips, accelerating technology implementation and industrial synergy; on the other hand, with her experience in managing the New York Stock Exchange-listed company AssetMark, she will assist Baidu in exploring cross-border merger opportunities and expanding into international markets amid tightening overseas AI regulations.

Liu Xiaodan's rich merger experience and unique "industry integration + capital empowerment" merger logic may inject new momentum into Baidu's deep development in emerging technology fields, also sending a positive strategic signal to the market—merger turning point.

It is noteworthy that almost at the same time Liu Xiaodan joined, Baidu announced the completion of its acquisition of YY Live, with a total acquisition price of approximately $2.1 billion (about RMB 15.2 billion).

2025 Era of Mergers and Acquisitions

As 2025 begins, China's merger and acquisition market is experiencing a structural turning point.

Since the introduction of the "Six Merger Policies" in September 2024, many regions have quickly taken action to plan merger and acquisition activities.

Shanghai's Jing'an District has established a merger and acquisition gathering area, Shenzhen has formed a 4 billion yuan merger fund alliance, and a 10 billion yuan semiconductor merger fund has been launched in Beijing... The intensive opening of the policy toolbox has allowed the primary market to sense the long-awaited spring.

"It's no longer about whether to merge or acquire, but rather how to merge or acquire to survive," lamented a partner at a Shanghai biomedical fund.

Since the beginning of 2024, "breaking away from reliance on IPO exits and starting the 'exit as much as possible' model" has become a core topic of interest for many investment institutions. As we enter 2025, with increased policy support and heightened market participation, several investors predict that "merger and reorganization" will become a new opportunity in the primary market.

According to Wind data, there were a total of 2,422 merger transactions in 2024 where listed companies acted as buyers. Among them, state-controlled listed companies disclosed a total of 1,814 merger events.

Industry Efforts

As 2025 begins, several listed companies have announced the establishment of merger funds, sending positive signals. Among them, Shanghai Pharmaceuticals has partnered with Dongfulong to establish a 1 billion yuan biomedical merger fund, targeting the valuation trough of innovative pharmaceutical companies; Wanze Industrial is laying out a 500 million yuan investment in the "two machines" industrial chain...

State Capital-Led Restructuring

On the other hand, the demand for mergers and acquisitions led by state capital is exploding, forming a "national team + market-oriented" mixed model.

"Are there any GPs skilled in mergers and acquisitions around? Our focus this year is on the merger field," an investment head of a state-owned industrial group consulted us.

In fact, this is not an isolated case. This year, many state-owned industrial groups have shown a strong willingness to merge and acquire. Some are actively seeking industries with strong synergy with their main business, hoping to achieve industrial upgrades and resource integration through mergers; others are using mother funds to invest in GPs, indirectly holding shares in listed companies to achieve diversified capital layout According to our observations, Beijing, Shanghai, Anhui, Shaanxi, Sichuan and other regions have successively announced plans to establish merger and acquisition funds, with scales ranging from tens of billions to hundreds of billions, focusing on fields such as pharmaceuticals and next-generation information technology, among which the biopharmaceutical sector is the most concentrated.

A partner at an investment institution pointed out: "Unlike the merger and acquisition frenzy of ten years ago that focused on 'speculating on concepts and market capitalization', traders in 2025 are more obsessed with the competition for technological discourse power.

AI Large Model Arms Race: The industry earthquake triggered by DeepSeek's open-source ecosystem forces major companies like Baidu and Tencent to accelerate their positioning, which may explain the deeper meaning behind Liu Xiaodan's rapid joining—rebuilding the technological moat through capital means.

Hard Technology Supply Chain Breakthrough: The rise of Shenzhen's "Six Small Dragons" brings a long-lost excitement to the industry while also pointing out investment directions.

Conclusion

The partnership between Liu Xiaodan and Baidu may provide precise capital navigation for Baidu's deep development in emerging technology fields. From the perspective of China's innovation ecosystem, this transformation also signifies a shift from "barbaric growth" to "meticulous cultivation."

As major companies complete their technological puzzle through mergers and acquisitions, local state-owned assets connect the industrial chain through funds, banks provide "long-term funds" to support hard technology breakthroughs, and market-oriented GPs act as 'matchmakers', building bridges between laboratories and production lines... A more rational and sustainable innovation pattern is gradually taking shape.

"God has closed the door to IPOs but opened the window to mergers and acquisitions." In the future, with the continuous influx of patient capital, the transformation of institutional investment strategies, and the further normalization of the market environment, the merger and acquisition market is expected to welcome greater development space.

When practitioners in the primary market collectively turn around, they may be pleasantly surprised to find that although there is no retreat in sight outside the window, at least it is a warm sun slowly rising.

FOFWEEKLY, original title: "Li Yanhong's 'Strong External Aid' is in Place—'Merger Queen' Liu Xiaodan Enters a New Battlefield"

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