Research On The Leveraged Buyout Financing

In 1984,Kang Investment Co.,Ltd was acquired by two famous Chinese companies--the China Resources and Group Bank Group,which symbolized that China had already stepped into a new age of overseas merges and acquisitions.For the 30 years,Chinese companies have never stopped making efforts to "go outside".Till the end of 2014,compared with 200 transactions of over seas M&A in 2013,China has already achieved 272 cases on overseas merges and acquisitions with the trading volumes of 56.9 billion dollars,which means a 36%growth rating than 2013.With the increase of M&A transactions,more M&A modes were invented,including Leveraged Buyout(LBO).Leveraged buyout is a special pattern in company takeover,which requires companies borrow money from banks or investors to finance the acquisition target enterprise,along with the commitment of the enterprises future cash flow and profit to repay their debts.Mergers and acquisitions give higher efficiency small enterprises to use pivot lever mergers of large enterprises,like "the snake swallows an elephant".Started from 1970s in western capital market,LBO is enormously mature now;however,it appears not popular in China.As a result,the paper is going to have a profound discussion about the problems of LBO in China with the analysis of LBO transactions.The methods including data analysis,literature reviews,and case studies will be applied to help finish the paper and give other companies advices.Firstly,basced on the overall background of overseas LBO of China,the paper aims to display the problems that Chinese companies face,and figure out reasons.Secondly,after discussing the problems and reasons,the paper will give advices for China overseas LBO to solve related obstacles which the companies meet.Last but not least,the paper will analyze two case studies—Shuanghui acquiring SFD and Geely acquiring Volvo,and these two case studies will help to test and verif-y aforesaid research.