Analysis Of Focus Media Backdoor Listing Effects

With the rapid development of China's economy and the terrible conditions for enterprises with China concept stock in USA,more and more enterprises with China concept stock choose privatization,returning to domestic market.The purpose for them back to domestic capital market is to raise more development funds,achieving sustainable development of enterprises.In China,there are two approaches for enterprises to be on the market: IPO and back door listing.Because the condition of IPO is strict and it has to be waited for a long time,back door listing,a special listing way,is more suitable for enterprises with China concept stock which are eager to go public to raise funds.Therefore,back door listing is hot in capital market,arousing a great mass fervor of back door listing for enterprises with China concept stock.In accordance with the case of back door listing by Focus Media,this paper,adopting the methods of combining theory and practice,qualitative analysis and quantitative analysis,compares and analyzes the change of performance in Focus Media before and after back door listing.First,through the review and arrangement of relevant theories and fruits of back door listing,this paper summarizes the reason for China's enterprises who are keen on back door listing from motivation,performance and procedure of back door listing.The main reasons are strict examination of IPO,high standards and long waiting time in China,while terrible business performance in listing company and the risk of delisting promote the formation of shell resources.Beside,this paper,through detailed analysis of the scheme of back door listing by Focus Media,introduces the background of two parties in transaction,the implementation of scheme,and motivation of back door listing.It is concluded that because of high difficulty,long time and complex procedure for listing by IPO and because the latest time of listing in regulated in privatization agreement and China just takes off restriction to advertisement industry,Focus Media,utilizing the advantage,succeeds in back door listing.The important part of paper is the performance analysis of buying a shell from HEDY HOLDING CO.,LTD by Focus Media,excerpting part of data of financial statement from 2014 to 2016 from Focus Media.First,the paper,under the perspective of financial performance,emphatically analyzing the influence of this transaction on profitability,debt paying ability,operation ability and developmentability of Focus Media.Then,through event study method,it analyzes the response of market to back door listing of Focus Media and the influence on company's share price.At last,through establishing EVA performance evaluation model,it analyses the changes of EVA value before and after back door listing by Focus Media.Depending on the analysis mentioned above,this paper holds the opinion that the back door listing of Focus Media is quite successful,not only making the market value of Focus Media and share holders' profits greatly increase,but also consolidating original business and bringing long-term development by exploiting new market and formulating new development strategy.Finally,this paper summarizes the reason of succeeding in back door listing by Focus Media and proposes the following suggestions,hoping to provide reference for enterprises.First,before buying a shell,enterprises should be fully prepared and formulate relevant schemes aimed at the laws and litigation risks in the process,so as to reduce the loss due to potential risk.Second,enterprises should employ professional agent for professional consultation service to reasonably choose shell company and transaction mode,guaranteeing regulatory compliance of transaction.Third,enterprises that decides to buy a shell should have a knowledge of relevant national policies to properly choose a listing site and listing scheme by utilizing the advantages of policy,so as to rationally avoid listing risk and shorten listing time.