Research On The Problems And Countermeasures Of Management Buy-outs In China

Management buy-outs emerged in the United States and Europe in1970s and1980s. As an important financial innovation and system innovation model, it’s of great significance and positive role in the internal incentive, reducing agency costs, the Group’s industrial structure adjustment, the expansion of venture capital exit routes and with wide range of applications in Western Europe and the United States and other developed countries.In China, MBO is introduced to solve the agency problem and the inefficiency of state-owned enterprises with high hopes. Along with the advancement of the reform of state-owned enterprises, China’s MBO was extremely active, but China’s capital market is not perfect, the legal system is imperfect, and related systems has not been established, and as a system innovation, MBO in China is still new, the operation of the process still has many places to be standardize and improve, so that the MBO is not smooth and experienced a climax, controversy, stop stage in the implementation process. There were many problems such as black-box operation, self-selling self-buy, missing system, underpriced, the narrow channels of financing and the loss of state assets, etc., which caused a great deal of controversy. Recalling the history of MBO in China from start to climax, then stop, the core problem is the pricing and financing issues.The object of study is the pricing and financing of MBO. By analyzing the status and problems of China’s enterprises’MBO in pricing and financing, as well as SINA MBO, learning from the advanced experience of the MBO in pricing and financing in the Western developed countries, summarizing the deficiencies in China’s MBO and lessons learned, the study give suggestions for our MBO in normal development.The main content is divided into seven parts:The first chapter is the Introduction section, which briefly introduced the background and significance of this research, the main research content, ideas, frameworks and research methods.The second chapter is the literature review, which summarized the MBO as well as pricing and financing from both domestic and foreign representative theoretical point of view systematically.The third chapter is mainly further analysis of MBO concepts and theories, including the meaning, characteristics and motivation and theoretical basis of the MBO. Its theoretical foundation described the principal-agent theory, property rights and incentive theory, human capital theory, corporate governance theory, economic theory of sharing.The fourth chapter introduced the practice situation in the United States, Britain, Russia and Eastern Europe of MBO in brief, and outlines the development of our MBO, then analyzed the differences between at home and abroad in detail, in order to draw experiences and lessons of foreign MBO to the direction of China’s MBO.The fifth chapter points out the major problems on pricing and financing of MBO in China and conducts in-depth analysis of the relevant issues. On pricing the problems are net assets per share pricing benchmark is of shortcomings, the management of the contribution can’t be scientific measure, the purchase price negotiations is lack of fairness and transparency, stock market is underdeveloped, the intermediaries are immature, the existing law is imperfect. On Financing the problems are the legality of financing, the main monitor of financing, the lack of professional institutional investors and financial intermediaries, poor financial environment.The sixth chapter is the case study section, including specific introduction on the background of SINA Corporation’s MBO, acquisition process, economic consequences, as well as analyzing of its market value pricing and the introduction of strategic investors to participate in the financing which are worthy of learning in the MBO in China.The seventh chapter puts forward some specific measures to improve Chinese enterprises on the MBO pricing, financing problems on the basis of above analysis, which focuses on the financing channel of the introduction of strategic investment, in order to be helpful. Throughout the full text of this paper, it has the following contributions:Firstly, it summarized the theoretical studies of MBO at home and abroad, as well as the practice of domestic and foreign MBO and relevant experience and lessons, which of specification development reference.Secondly, it analyzed the SINA MBO of the whole process, pointed out its merits, collected detailed information, provided a basis for further study of the later scholars.Thirdly, through the pricing and financing research of the MBO in China it put forward its own suggestions, pointed out the importance of the introduction of strategic investors in the MBO in China, which is an important channel to solve the pricing and financing problems of MBO in China.At the same time, as the author’s ability as well as time, space is limited, this article there are still some inadequacies:as the analysis of the MBO process is not transparent and data collection is limited, it is inevitable of some omissions; more qualitative analysis, lack of quantitative analysis, in particular, the introduction of the pricing mechanism model; the recommendations are of the macro, needing to go through the test of practice. These deficiencies have yet to be under further research.