Research On The Financial Operation Problem Of Management Buy-outs

Management Buy-outs (MBO) refers to buying the company's shares by the managements for the purpose of changing its ownership structure, power of control structure and the assets structure, thereby restructuring the company and obtaining expected returns from the investment. With the rapid reform process on the state-owned enterprises, more and more companies are implementing MBO progressively in clearing the property right and strengthening the incentive. MBO is favorable to adjusting the enterprise structure and integrating the business. What's more, it can decrease the agent costs while increase the management profits of the enterprise. Based on the theory of MBO, this paper discusses its functions and the existing problems during its operation process from the perspective of finance, and finally proposes making use of financing lease to realize MBO.At first, this paper presents the basic system content of MBO, including the concept, the difference between MBO, executive stock options (ESO) and employee share ownership plans(ESOP) ,and the theoretical foundations; Second, through reviewing enterprise's reform course in China , have analysed the current situation of running MBO in our country; Third, while explaining financial function that MBO of our country has, have analysed emphatically that under the situation which the capital market is undeveloped, and also the financial market and legal environment have not perfected further yet in our country , there are some problems in practical operation of MBO, such as state-run assets loss , financing difficulty, and high dividend distribution ,etc. At the end, combine our country's concrete politics, economy, market environment and the managements one's own actual conditions , have put forward and attempted to implement the idea that realizing MBO through financing lease, and think the MBO by utilizing financing leasing corporation's strong financing advantage and professional skill can avoid those questions of the financing obstacle and high dividend distribution in the MBO at present reasonably, the purpose of using financing lease in MBO is to enable the state-run property right to withdrawal competitiveness trade steadily, rationally, and then the overall arrangement of national economy strategic adjustment in our country is more and more smooth and orderly.