The Analysis And Enlightenment Of The Battle For GOME's Control Right

In 2010, GOME Events, which was the corporate control fight between major shareholder and agents, caused great concern in academia and the media. The understanding of all aspects varied a lot. Some thought the implementation of share incentive scheme and Bain Capitals investment were good for GOME, realizing the enterprise value maximization. Some regarded them as damage to the legal interests of the minority. What's the impact on domestic professional manager market of GOME Events? How to protect the private enterprises from similar events happening in future? Of these problems, there are currently no deep analyses from the industry's view by analyzing financial data. This article makes up the gap.Although the main financial ratios of GOME were worse than those of Suning in 2008 and 2009, its basic financial indexes remained consistent with the trend of previous years. GOME and Suning both adopt the interest-free financing model——financing from partners. This type of financial approach can bring a lot of free funds, but at the same time cause a high debt-to-asset ratio. From the analyses of asset's and liabilities'structure, financial capacity, cash flow, stock price changes and industry benchmarking, there was no real funding crisis of GOME in 2008 and 2009, so the necessity of Bain Capital investment was questionable. By analyzing the price of Bain's convertible bonds, the compensation conditions, and the exercise time, the scheme of Bain Capital investment was unreasonable.By comparing of the process, the exercise conditions, the exercise price between GOME and Suning's share incentive schemes, we can find that the exercise conditions of GOME's scheme are loose, the exercise price is low, and the process is "legal but unreasonable". All this reveals GOME's share incentive scheme has caused damage to the legal interests of major shareholder and richened agents'allies. But it also shows the major shareholder of GOME has not paid enough attention to share incentive scheme's implementation, and this brought risk to GOME.The GOME Events also reveals the deficiencies of some regulations.These studies contribute to national government and regulators consider how to strengthen supervision on the investment behavior of foreign investors and overseas listed private enterprises, and regulate the agency behavior in order to promote the healthy development of private enterprise.