Financial Characteristics Reverse LBO Analysis

Reverse leveraged buyout means target company was leveraged buyoutand then go public again. In America and Europe, the quantity of RLBO ismore than IPO. Accounting performance of the RLBO firm revealsoutstanding in profitability. The paper analysis six annual reports of Telecityand find it performs excellent than peer group. Its perform cash flow increasesby years, it invests and gets loans reasonably. Its share price is rising. Thepaper analysis the reasons of its success. Its success comes from the ability toreduce costs and practices various incentive mechanisms and pay attention toperform cash flows. RLBO promotes target firm to create profit and cashflows efficiently. The share performance plan and other incentive schemescan incentive the employees. The buyer costs less capital and gains muchmore. It’s two-wins. Our country encourages financial innovations andimplements various reform schemes such as registered capital paid systemand share issue register system. These measures are in favor of the applicationof RLBO. It’s useful to promote firm’s vigour and add equity value andperfect the capital market. It’s important to take public company go privateseriously and pay attention to the integration and perform cash flows.