Research On Corporate Control After Management Buy-out

MBO(Management Buy-out),as a flexible way to change the form of ownership and available financing channel, occupied an important position during the restructuring of SOEs form 2002-2004.But MBO soon triggers a sensitive and heated dispute. While it seemed that we all forgot the coral question of MBO: Changing the form of ownership, conversion of the corporate control, to upgrade enterprise performance and achieve the value of enterprise. During the process of MBO, questions on the acquisition, price, and source of funds are attractive. But the key to the success of MBO is how the management can achieve a better performance after they hold the whole control of corporations. What disappointed me is that only the continued MBO cases can catch the eyes, nobody cares about what had happened in these enterprises, which have already experienced MBO. No one is willing to research these enterprises'situation to get a conclusion then justify the dispute happened or ongoing. So I will put the most attractive topics in the MBO away, pay attention to what had happened in the enterprises, which experienced MBO. Precisely I will focus on the very important aspect of these enterprises management structure-corporate control then I can provide some suggestions to debate on MBO.In China, the management could hold controlled shares of the target companies with relatively low price. Before that, the management had been the senior management of the target companies. Even because of negative of the large state-owned shareholders, they had already formed a internal controlled situation. SO after MBO, the management holds the advantage of the facts and the law no matter in the aspects of management level or the equity level. For the management, the advantage has never been so strong in the companies. According the theory of corporate control, the source of the control comes from the direction of the law or reality base on the actual system gaps, while the management has just monopolized both. The current legal system just cannot cope with such a strong control. From the theory of corporate control, the topic tries to explored a effective method to restrain this strong control to protect the small shareholders and other stakeholders in this kind of companies.