A Study On The Enterprises LBO Financing Decision-making

Leveraged Buyout (called LBO), appeared in early 20th century 60's US, LBO is popular with an important kind of M&A in the 80's. At the beginning, the transaction of Leveraged Buyout is carried on the small companies. Involving of the bank, the insurance company, the risk capital and so on, Leveraged Buyout was promoted, and Leveraged Buyout becomed the noticeable method of M&A in 1980s. At the beginning of the 90's, Leveraged Buyout has decreased, but Leveraged Buyout has recovered at the latter of the 90's; Since 2000, Leveraged Buyout had flourished not only in Europe and US, but also in the Japan, China and so on.At first, the introduction of LBO to our country is to solve the property question of the privately operated enterprise in the time of economical transformation, but LBO is widely carried out by the management of the Public Corporations in China, because of the policy transformation of the Public Company control. Although LBO has been carried out in property transformation by many enterprises and persons, and it had obtained many good results. Because our country's economic system and development of the legal has the quite big disparity with the western developed country, the application of this financial innovation in our country has received many limits, and as a result of the lag of the environmental construction, it has had many disadvantage consequences.This article bases on the basic theory of LBO and its financing, and mainly analyzes the question of the LBO financing and the factors that affect LBO, which is carried on the enterprises in our country. Then the article puts forward advices to profecting the system of the regulations and the supervising, promoting the reform of monetary system. At the same time, the construction of our country credit system should be strengthenned and the strategy investors should be introducd. Especially, this article has made the further innovattion of the trust investment used in LBO financing.