Research On Problem & Solution Of Management Buy-outs Applied On Chinese Corporation

Management Buy-outs (MBO) is an economic behavior that the managers acquirethe company through purchasing the company's share capital, changing its ownshipand capital structure. It is considered in general that MBO is help to correct theexcessive "agency cost", because of its collecting the ownship and operationship.MBO is one of the important mergence&acquisition, and have an extensive use inwest countries.In recent years, a policy has been carried out all through the country that isstate-owned component (SOE) must be withdrawn selectively from different domain,and the regulation of economic layout and configuration has been actively boosted.Meanwhile the idea of MBO was introduced into china, which point out a new wayfor state-owned enterprose reform. Proponents are eager to solve the problems such asSOE's unclear ownship, extensive agency cost, magagers' incentive and constraint,and so on, with the help of MBO.However, due to the unefficient laws& regulations,MBO was borned with disputed, which focused on low evaluation, dark-boxedoperation and state-owned capital flight. Even the government also has an uncertainattitude on MBO.The thesis first gave an introduction of MBO, including its meaning, theoreticalbasis, characteres, operation procedure, types and paratice in westen countries. In thefollowing, the author summarized MBO in the background of Chinese SOE reform inthe way of analysis listed companies. In the next chapter, Chuangyu Group was set asan example to prevail problems during MBO, such as unfair price, unsymmetryinformation, and illegitimacy funds. Aiming at which problems, auther indicatedcorresponding solutions. Discount Cash Flow(DCF)based on CAPM model is themost importmant modle while evaluating non-listed company. Financing legally,prevail information and improving idealism is required, too.At last, a programme was set up for management of company W to take part inenterprise ownership transform.