Research On Financial Issues Of Enterprises Management Buyout In China

With the permeation of economic globalization and the development of China's openness to the outside world, Management Buyout, one of the widely used property-right operation modes in western countries, came into China. The registration of "Beijing Stone Investment Co., Ltd." on May 13, 1999 marked the threshold of MBO in China. Subsequently, more and more enterprises tried to nudge into the list of MBO, and in 2002 the implement of MBO reached a climax in China.It has proven that MBO played an active role in clearing property right of enterprises, improving internal incentives, and reducing agent cost. In China MBO can help the state-owned capital strategically retreat from the general competitive fields, provide solution to the problem of "Owner Absence", which has disturbed the state-owned enterprises (SOE) for many years, and smoothly transfer the SOE from present mode to modern corporate system. Series problems, however, appeared during the process of carrying out MBO in China. For example, the trades went unpublicized, the prices of trade were underestimated, or the sources of funds for purchase were illegal and so on. Ineffective supervision and improper operation, to great extent, contributed to the loss of state-owned property.Why is the way for developing MBO in China so hard? What on earth has driven MBO into a dilemma? What kind of short-term strategies will he possible according to the present situation of our country? And what is the proper orientation for the long-term development of MBO in China? How should the healthy soil for MBO be cultivated? This paper focuses on financial problems on China's MBO and deeply analyzes the problems of pricing and financing for MBO from the perspective of accounting and finance. Through analyzing I try to explain the questions above and put forward some reasonable suggestions.This paper is divided into five parts:The first part is introduction. This part introduces research background, research methods, research ideas and the main content, and then reviews relevant literature of management buyouts both at home and abroad, so as to lay the foundation for the analysis after the text.The second part is relevant theories of MBO. It summarizes the basic concepts of MBO and draws the view of this paper; it summarizes the theoretical foundation of MBO, divides the development stage of MBO in China, and analysis the changes of the main purchaser in every stages.The third part is the study of pricing way of MBO in China. First this part gives a brief introduction on assessment methods of enterprise value, and then puts forward objective and scientific assessment methods that MBO can adopt in our country——under the occasion that assessment of Chinese enterprises value is not fair,and last analysis the historical contributions of management quantitatively, as a reference of standardizing existing pricing methods.The fourth part is financing issues of MBO. This part first introduces the financing ways and structures of mature MBO in Western countries, and then provides available financing means for MBO in our country nowadays and available opinions for standardizing MBO financing on the basis of analyzing financing situation of MBO in our country.The fifth part is discussion on profit management of MBO. Basing on financial perspective, this part explains the concept of profit management and shows the possibilities of profit management of MBO in China. On the base of theory and empirical research on profit management of listed company's MBO, this part put forward some proposals for profit management of management layer in MBO in our country.The main points:On the issue of MBO led to the loss of state-owned property or not, the paper's view is:We should use dialectical thinking to view it. Non-standard MBO could lead to the loss of state-owned property. It does not mean that all MBO will lead to the loss of state-owned property. The key is how to use this tool——MBO. In our country, changing SOE into market-oriented company through MBO, if operating properly, has potentially enhancing space in management efficiency. From this perspective, MBO has not led to the loss of state-owned property, but achieves value increase of enterprise.The main contributions:1. Select appropriate enterprise value assessment methods depending on the nature of an enterprise. In the situation that value assessment of Chinese enterprises is unfair, combining with international current enterprise value assessment methods, with theory as the basis and law as the yardstick, and selecting relevant assessment model for different enterprises, as a reference of pricing method for current MBO in our country.2. Provide some suggestions for broadening the financing channels and improving the financing exit mechanism. Basing on analyzing the status of China's MBO financing, it explores the diverse financing channels, development of investment and regulates MBO financing exit mechanism, and offers some available countermeasures.3. To take necessary supervisory measures on profit management of MBO. This paper analyses the possibility of profit management of management layer in Chinese MBO, basing on current theory and empirical research, puts forward some proposals for profit management of management layer in MBO in our country, with a view to effectively control the losses of state assets brought by profit operating of MBO.