On Leveraged Buyouts In The Mergers And Acquisitions

Leverage Buy－Out(LBO)is one of acquisitions , which derived from America in 1980's. In the past 20 years, there have been many LBO transactions through using innovation financial instruments such as junk bonds and convertiable bonds in Europe and America capital markets. LBO expands the scale and range of M&A greatly, that is, not only big companies acquire small firm, but also small firm and manager can acquire those big companies. The successful cases of LBO abroad show that LBO can solve the financing problem in acquisition. What more important is LBO combines the financial technology with encourage mechanism, which performs special function on revalution a corporation and promoting the manage and control level of corporation. In China, the restructure of economy and reform of economic system urge that we should make some change s in merge and acquisition. In one hand, the sponsor of acquisition should be corporation other than government, on the other hand, the acquisition should act on market other than by government. With these changes, we should conduct more means of M&A including LBO. In fact, there appear many cases of M&A in recent years, and various methods have been used. Some companies conducted management buy-out(MBO), others performed leverage buy-out(LBO).In the course of M&A, LBO is getting more and more important.However, there are still many barriers facing LBO in China. There are some difficulties in the operation of LBO. Then, what is the fundamental of LBO? What is the role of LBO on restructure industry and reform of corporation system? These questions are worth researching. As a result, it is meaningful to study the realistic conditions and the operation mode of LBO in China. Such research also can provides some conductions and advises on adjusting resources and improving the efficiency of M&G.This paper mainly uses comparison analysis, general analysis and cases analysis to study LBO in China.The paper is composed of four episodes. The first analyses generally the emerge background and development and the basic features of of LBO. In this part, it emphasis on the profiles of LBO. Then it discusses the relation of LBO and MBO. All these prepares for the following. The second hackles various theories on LBO, which explain the motivation and performance of LBO.It is these theories that construct the fundamental analysis method of LBO. The third mainly analyses the cases of LBO in China and abroad. It also makes a comparetion analysis on LBO of domestic and foreign in such aspects as goal,finance, pricing and exit mechanism. Through this analysis, it gets some important conclusions. The last one is a further analysis, which pays attention to the difficulties and barriers in the LBO in China. Finally, the paper puts forward some solutions and advices in accordance with these problems.There are some points in this paper. First, LBO would play important role on improving the restructure of economy and reform of economic system by corporation manager and small enterprises's acquisition act. Secondly, LBO in China face larger risk for there are much more barriers in legal, finance and pricing. Thirdly, it is benefit to the breakthrough of regulation and expanding finance channels to conduct the trust fund into LBO.The paper is fresh and particular in following. First, it makes use of various analysis methods coordinately such as theory analysis, case analysis and comparison analysis. It is worth to mention that it is special in the comparison analysis on the LBO of domestic and abroad. Based on studying a number of important cases, the paper completely and systematically shows the differences between LBO in China and foreign. As a result , it uncovers the key factors that affect the fate and performance of LBO and gives some useful conclusions. Secondly, as far as the content is concerned, the paper hackles systematically the theories interpreting LBO, and much other literature just generally explain the motivation of corporation M&A.