The Study Of Management Buy-out And Its Path In China

MBO is that the company’s management through debt finances or equity financing to acquire the company’s shares in order to gain ownership of the company. After the acquisition, the management controls the mastered of the company, which can independently determine the company’s future strategic investment plans and reduce agency costs. The company’s management generally have a profound understanding of the capital structure of the Company and the future direction of development.when the capitalization of the company in stock market is undervalued, and the company has good future prospects, the company’s management will often make use of the company’s loose shareholding structure, acquired shares back to the company with external forces to obtain control of the company, by changing in business strategy and restructuring the capital structure,to reduce costs and improve profit potential space.MBO began in European and American countries in the1980s, as a exotic introduce to our country since the1990s, has been used as an innovative research system was constantly imitating practice, hoping this innovative management model to address the issues of missing owner of state-owned enterprises, and forming incentive effect to the management, reduce the destabilizing influence in enterprises shareholding significant change. Helping enterprises to achieve a smooth transition, MBO has gradually matured by practicing for over30years in the West, some embodiments MBO case also shows that the implementation of management buyouts could enhance the incentive management and shareholders, significantly improve the efficiency of enterprise management. However, due to differences of European and American countries economic institutions and legal systems, after20years of research and practice in our country, management buyouts has not been well utilized to solve the problem of our post-reform performance improvement and state-owned capital loss in state-owned enterprises, on the contrary, unfair pricing, financing difficulties, information disclosure and a series of imperfect issue appears in the course of implementation. MBO caused widespread controversy just introduced in the beginning, and had also once been stopped by the SAC as a series of non-standard legal easily lead to risk issues in the process of implementation, and thus the implementation of management buyouts in our theory research and practice still needs further strengthening.This paper combines the theory method and practice method to study the MBO and its path. Firstly, we describes the meaning, features and scope of MBO from the theory, in addition to the some basic theory of management buyout:the theory of agency costs, incentive theory of property rights, corporate governance theory, prevent denial of benefits are described, followed by status research analyzing and finishing.Then this article analysis and compare the motivation of domestic and overseas management acquisition, obtained abroad are generally MBO for agency cost savings and the optimal allocation of resources, preventing hostile takeovers, as transferring large stock and getting rid of the Listing restraint system or divesting its business, but our implementation of management buyouts are generally in order to adjust the economic strategy in state-owned enterprises to achieve perfection of the enterprise property rights system or state-owned enterprises out of capital. Next, the article analysis the general procedure of the management buyout, the MBO must first clear the company’s development strategy, the acquisition of risk analysis and evaluation, the estimated value of the company; Then evaluating and acquisitions pricing, takeover talks, signing of the contract and performance of the acquisition, publishing acquisition announcement and other steps, the company’s capital structure and ownership structure reorganization after completion of the acquisition, to reached the purposes of integration of resources, and improving profit margins.In the theoretical core of the article, the article analyzed the financing path and problems on China’s implementation of the management buyout. By research, China’s implementation of management buyout financing obtained substantially through private lending, the introduction of strategic investment by way of trust financing, asset allocation increment financing, and contractual investment funds way through several forms of financing. The article study management buyout of the company exist in the process, there are questions the legality of the acquisition of the subject, limited financing channels, the lack of a reasonable standard pricing mechanism, inadequate disclosure and other issues.In practice research section, the article mainly analyzed through the implementation of the company’s management on Sina acquisition. Sina, as the Chinese Internet industry is one of the four portals, financial condition and operating conditions are performing well, and the future rapid development momentum, great investment potential, but because of the dispersion of the capital structure, the lack of control of the shareholder, suffering capital suitors attack, CEO constant changes, and capital has been manipulated outside suitors.Through the implementation of the management of the company before the acquisition Sina internal and external environment are analyzed, and the entire acquisition process, management structure, financing and acquisition implementation results were analyzed, the results of Sina is China MBO Internet industry’s first management buyout, the financing end to16years of Sina dispersed ownership nightmare, always worried about the risk of attack by capital, further increasing the liquidity of Sina, Sina management established as the largest shareholder of Sina’s position. The acquisition also demonstrates the company’s strategy and management’s confidence in the future development for the public good development company demonstrated a signal, is conducive to the company’s future share price increase.Through analysis of the case, from the acquisition of Sina can be seen MBO advantages:First, effective solution to the problem of dispersed ownership, improve the efficiency of the management board, in addition to preventing a hostile takeover through acquisitions, stable the company’s management, to protect the long-term development strategy of enterprise effectiveness. Secondly, most of the management buyouts are leveraged transaction is completed, but Sina both through bank financing, private equity funds have joined the participation of this financing model can effectively reduce the pressure on the company’s future debt service, and will not cause dispersed ownership, saving the cost of financing at the same time protect the owner’s income, is a worthy lesson financing paths. Finally, Sina’s management except through their participation in the acquisition, it also allows employees actively involved in the acquisition, mobilize the enthusiasm of staff management, making the company’s future development more dynamic.Sina is China’s implementation of the relatively successful management buyout case, but due to our existing market is still imperfect, Sina’s acquisition was completed in the United States legal system is down, so the state-owned enterprises and non-state-owned enterprises according to their specific circumstances, take reasonable and effective way to solve the problem of fragmentation of their equity. Also Chao used to fund preparations for participation in management buyouts purchase additional shares of tradable shares is built on the basis, in our present, many state-owned enterprises and private enterprises, there is no non-tradable shares of the situation, if the direct use of the management acquisition mode of acquisition, the stock continued to rise if not, it is likely to face a huge risk. At present, for the laws of our country still has many MBO restrictions, which for the successful implementation of MBO has created a significant obstacle, Sina choice under the law in the United States, using the establishment of an investment holding company completed the acquisition of international operations way, which for our country before the law limits the amount of investments and guarantees a good evasive, but in2006in accordance with the amendment of the Articles of Association, the company is no longer legal restriction on the proportion of foreign investment, so Sina mode of operation in the country is legitimate, can learn from.Articles through theoretical and case analysis, path optimization MBO some suggestions:First, China’s implementation of the management must be received relax financing constraints for the management buyout offer legitimate source of funding, in addition to fostering institutional investors to participate in the management acquisitions, improve and perfect the relevant laws and regulatory systems, the last state-owned enterprises should be open, fair and impartial management buy-out operation.Finally, the paper on the implementation of management buyouts in our country made some prospect that future state-owned shares and exit to provide a policy on the management buyout opportunities, business model change for management buyout offers plenty of opportunity to practice, standardized management acquisition-related legal and regulatory framework has been initially formed, professional managers for the management buyout of the initially formed to provide preconditions for the development of China’s private enterprises also provide the possibility for the management buyout, so that future management in our country can still smooth implementation.