Comparing The Financing Approach Of China's MBO

MBO means that the management acquires the whole or part ownership of the company by financing, which makes the management act as both owners and operators and constructs a new company with lower agency costs. As an institutional innovation, MBO plays an important role in several parts, such as adjusting the economic structure of the state, optimizing the asset disposition, reducing the agency costs, accelerating the reform of small and medium-sized enterprises, arousing the enthusiasm of staff, improving managerial skill and so forth.However, to achieve the MBO needs a lot of fund, which is hard to afford by the management itself. Meanwhile, due to the restraint of Chinese financial environment and the flaw of the exterior market, financing becomes the focus of the MBO.The thesis firstly does a research, referring to the background of the MBO in our country and then presents the contents and method. After that it summarizes the meaning, characteristic and significance of MBO. After systematically studying and comparing the major financing patterns, the respective features of foreign MBO with the financing status quo and major patterns and limitations of China's MBO, this paper provides related suggestions.The thesis uses many methods such as comparison, case study and normative analysis to reveal defects in MBO theory and provide ways. It points out that in China it is necessary to improve some laws and regulations, deregulate enterprise financing, innovate financial instrument, improve financial system to solve financing problem. Only in this way, can MBO develop healthily. Learning from the international experiences, the thesis brings forward the innovation which is M&A Fund.