MBO's Application In SDE Reform

Management Buy-outs (MBO), as one model of enterprise merger and acquisitions, is an institutional innovation. MBO is still in the initial stage in China at present. Some corporations have tried MBO and acquired some experience. Property Reform and Manager Incentive are two fundamental functions of the MBO in China nowadays. It is proved that MBO work actively in reducing agent cost, rebuilding the incentive and constraint institution, improving efficiency in foreign country. But in China, kinds of problem occurred during the MBO implementation because of the low efficiency in market economy, poor capital market and lack of relative law, which has attracted the attention of academia and government. There is great significance in research and explore MBO nowadays in China. This paper tells us that MBO should not be the general or popular model of enterprise property reform by combining the advanced theory, practice in foreign country with China's situations. What we need is the lawful, ordered, efficient MBO and property reform. We'd better try and develop it first, then implement and normalize it.