A Study On The Pricing Problem Of Management Buy Outs (MBO) In State-owned Enterprises

The pricing problem is the core and focus in the process of Chinese state-owned enterprises practice of Management Buy-outs (MBO). This paper argues that it is not reasonable of the present pricing way for the price is decided according to the Net Asset Per Share. As a result, many State-owned assets are lost and the benefits of minor stockholders are damaged. Aiming at present situation, through carefully research of enterprise valuation and Comparative analysis of the same industry, this paper brings out a relatively reasonable method. The author considers that the price of MBO should be based on the enterprise value which may evaluated through Free-Cash-Flow method, furthermore the history contributions of the managers should also be considered and be converted to a certain amount or a certain percent, then through the auction mechanism in the negotiation process the price of MBO can be finally decided.