Studies On Normative Financing Approaches Of Management Buy-outs

Management Buy-outs (MBO) , one of the most important financial innovation in twentieth century, has been applied extensively in developed countries and some countries in transition economics mode. Beside this, MBO is an important measurement for the reform status of China State-owned enterprises (SOE).Due to the lagging situation of establishing the related legislation and supervision system, Many problems has been found during MBO' operation and has caused a raise of related dispute. Major focuses of those problems are legitimating of the buyer, pricing methods, and financing sources. This article studied on possible normative financing approaches under the condition of legal buyer, fair pricing has been achieved.Integrated with China' s current legal and financial environment and the latest result of international studies on MBO, and many business cases of the SOE MBO, this article suggested several possible normative financing approaches for MBO.In the article the author briefly summarized the theories and main features of MBO. After that, the author pointed out that MBO is an inevitable result of the development of modern economics and management. And then, this article did some research on how MBO impact on the reform progress of SOE, suggested several possible normative financing approaches, and made some suggestions. Beside those, the author did someresearch on current illegal financing approaches, and pointed out some of those approaches were absolutely illegal, and further pointed out some may be legalized with the publishing of related regulation . The motive of the article is to promote normative financing approaches in SOE's MBO, and to support the development of MBO in China healthily.The subject and the study of this article have a quite important reality meaning. This article also made some innovation, held forth some exclusive viewpoints and solutions on some crucial problems. For example, on how to establish financing entities, normalize the trusteeship relation, recognize some illegal financing mode, and so on.There are some open questions beside those research results in this article, such as possible illegal actions under the cover of normal financing approaches. Because those open questions are too complex, this article doesn' t discuss them.