The Study On Corporation Valuation In MBO

In the1970s and1980s, MBO originated in Europe and United States, which wasa new capital operation to influence the company Mergers and Acquisitions.MBOoffers a new idea and method for Chinese enterprises reform of property rights, whichwas obtained much attention because it can achieve the goal that is the combination ofoperators and owners.MBO has the important practical reference for Chinese reform ofproperty rights, but still need to be constantly explored and improved in the practice.Base on the relevant theory, this paper reviews stages of MBO in China, reveals itsproblems and points out the core issue of whether it can implement successfully is thatfairness of corporation valuation. The main reason that the loss of state assets occursfrequently is unreasonable pricing of the ownership transfer. Through in-depth analysisof pricing situation and problems of MBO in China, the paper compares pros and consof various corporation valuation models, attempts to build a new model withcharacteristics of MBO which combines the discounted future free cash flow modeland the B-S option pricing model and tests the new model and method in the practicalcase of MBO. In addition, on the basis of utilizing the valuation model, the paperdraws the advantages of market-oriented pricing mechanism in developed countriesand puts forward suggestions of the transfer ownership pricing. The aim is to perfectpricing valuation mechanism in MBO, approve option price scientifically and makeoption pricing theoretically reasonable and practical actionable by MBO that a newcapital operation in China.