A Study On The Pricing Problem Of Management Buy-Outs(MBO) In China Listing Company

This paper focuses on the pricing problem of management buy-outs(MBO) in the present situation of China. Compared with the present pricing way which is not reasonable, a relatively reasonable method is brought out. There are seven parts in this paper.Part one is the introduction, which states the background , significance, orientation, approaches, logic route and possible originalities of the research in this paper.Part two introduces the brief concepts of MBO, including its definition, basic characteristic, and basic theory. The motive of MBO is analyzed and its developing history is also introduced in this part. Part three analyzes the developing progress of MBO in China and its present pricing way. This paper argues that it is not reasonable of the present pricing way for the price is decided according to the Net Asset Per Share. As a result, many State-owned assets are lost and the benefits of minor stockholders are damaged. The author considers that the price of MBO should be based on the value of a company which is evaluated through Discounted-Cash-Flow method . Furthermore the history contributions of the managers should also be considered and be converted to buy capability, then the price can be decided. Part four is about the evaluation methods of the listing company's value. In this paper, Discounted-Cash-Flow method is considered to be more scientific. Furthermore, the evaluation methods of the intangible assets are also be introduced in detail. Based on the things above, a relatively scientific pricing method of MBO is determined.Part five focuses on the problem of the managers' history contribution. Managers' history contribution is a necessary factor considered during MBO pricing process. In this paper, Multi-hierarchy Fuzzy method is applied to make the managers' history contribution quantified. This result can be converted buy capability. Thus, the final price is determined.Part Six is about some problems else on MBO, including the negotiation process and the law or rules on MBO.Part Seven is the conclusion of the paper. This part also puts forward some issues needed to study further.