| Management Buy-out (MBO) is a kind of ownership transfer that emerges from the traditional merger and acquisition theory. Under the developed market conditions, MBO is an important means to cut back corporate agency cost, motivate management, and prompt listed companies and conglomerates to restructure themselves. In 1980s, Britain succeeded in privatizing its railroads, airlines, hospitals and other public sectors through an extensive use of MBO. In 1990s, MBO was widely applied in Eastern Europe for economic restructuring.At present, MBO is a major topic of China's capital market. The 15th Party's Congress required that state-owned economy gradually retreat from competitive sectors; while the 16th Party's Congress advocated the thinking of strategic restructuring and management by different levels of state-owned assets, and decided to protect the citizens' legitimate non-employment-related income and to greatly develop private enterprises. The two Party's Congresses paved the way for solving the problems of the ownership reform of state-owned enterprises and the retreat of state-owned assets. MBO came into being just in time, not only as an important means for clarifying ownership and motivating managers, but also as a breakthrough in the strategic restructuring of state-owned assets.However, the implementation of MBO was seriously hindered due to the ever-changing environment, motivation, policies and laws, and the different ways of its implementation. Moreover, during the implementation of MBO, problems emerged such as the loss of state-owned assets, the prevalence of a certain shareholder, insider control, and even violations of laws and regulations. These problems greatly challenged the current legal system and the government's supervisory framework. As a result, MBO became a controversial issue that attracted wide public interest, putting its practical value as an important means of asset allocation in great doubt. Obviously, it is of great practical significance to deliberate and study how to properly implement MBO and effectively monitor its implementation.Based on the above understanding, the author summarizes the MBO cases of China's listed companies in recent years. After a preliminary study of MBO's theoretical basis and an examination of MBO's implementation in China, the author concludes that under the current legal and policy framework, MBO can play an active role in clarifying corporate ownership, reducing agency cost and motivating managers, and can become an effective means for restructuring state-owned assets and reforming state-owned enterprises. Through an analysis of the line of thinking when listed companies implement MBO and their ways of doing so, the author uncovers the major problems, obstacles and risks in implementing MBO. Finally, under the current legal and policy environment, the author reviews the successful implementation of MBO by listed companies and the government's effective supervision. Due to China's economic restructuring, MBO was developed in a unique way in China. It would therefore be improper to directly draw from the experience of the developed markets in the West when we evaluate MBO's practical value, policy and supervision, and the ways of its implementation. Instead, we should rely on useful experience and ways of implementation in China, formulate, revise and improve current laws and policies, and develop MBO in a legitimate and orderly way, so as to facilitate the restructuring of the state-owned economy.The thesis consists of four chapters. The first chapter introduces MBO's theoretical basis, implementation process and practical significance in China's current economic development and the reform of state-owned enterprises. The second chapter reviews the implementation of MBO by listed companies based on a survey of the development of MBO and typical cases in China and a comparative study of the implementation of MBO by local and overseas companies. The third chapter further examines the practical issues and ris... |
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