Leveraged Buyout Regulation Research On Legal Issue

In the process of US acquisitions in the 1980 s,acquirers using leveraged buyouts organized large amounts of funds and conducted precise directional design in a short period of time to gain control of listed companies.Due to the close connection between leveraged buyouts and the secondary market and the “natural evasion” of regulatory rules,excessive leveraged fund design after the completion of the acquisition has caused severe sequelae in practice.Long Wei Media Co.Ltd is the source of Xiangyuan Culture Co.Ltd(formerly Wangjia culture Co.Ltd,the supervisory authority repeatedly sent letters to the sources of funds,and the acquirer gradually disclosed the specific composition and the financing situation of the acquisition funds.Under the penetrating inquiry of the supervisory level,the fund lending entities Gradually withdrawing from the ranks of purchases eventually led to the failure of the acquisition.The stock price of Xiangyuan Culture Co.Ltd,which originally had a valuation of around 10 billion yuan,fell sharply,and the valuation of the company fell to 5 billion yuan.In the dispute between Baoneng and Vanke Co.Ltd(hereinafter referred to as the “Bao Wan dispute”),the asset management plan used in the acquisition of “Baoneng Department” once floated a deficit and approached the liquidation line.In the context of “de-leverage” supervision in the financial sector,leveraged buyouts,especially highly leveraged buyouts,will be subject to more stringent supervision.In practice,the ratio of external financing and self-owned funds acquired by the acquirer for the acquisition determines the multiple of leverage.The lower the leverage ratio in the transaction structure,the less uncertain the factors such as supervision,auditing,and public opinion are faced in the acquisition process.In the actual acquisition,a low leverage ratio will limit the acquisition scale.The leverage of a single leverage is limited,and the multiple levels and structural design are complex.The complex leveraged acquisition model with a high leverage ratio becomes a large-scale acquisition.The protagonist.Since 2016,the supervisory level has made great efforts to inquire about leveraged funds.In the transaction structure,the acquisitions that designed more than two levels of leveraged buyout funds are all inquired by the exchanges and require additional disclosures.In China,which adopts a separate industry supervision system,multiple sources of acquisition funds often involve multiple regulatory entities.In an endless stream of mergers and acquisitions,the high leverage behind the acquisition of funds far exceeds market expectations.The acquisition of funds through financial instruments is not necessarily reasonable,and hidden risks pose regulatory concerns.“Through-type supervision” is essentially a regulation aimed at identifying the source of funds and controlling risks.Comprehensive market feedback and regulatory dynamics also demonstrate that both the market and regulators have begun to face up to the unreasonable leveraged buyouts.Possible capital market risks.This paper hopes to analyze the basic principles,characteristics,and modes of leveraged buyouts by studying special acquisitions of leveraged buyouts and combing the historical development of leveraged buyouts and changes in China's regulatory policies and discusses the main issues in leveraged buyouts at this stage.Problems and potential risks.In the context of the country's proposed industrial upgrading,leveraged buy-outs have positive significance for the country's economic development and industrial restructuring.For the purpose of risk prevention,it punishes the current merger and acquisition market for irregularities,clears relevant supervision to avoid overcorrecting under the stress,and achieves the purpose of curbing abused leveraged acquisitions without sacrificing confidence in the acquisition market and exploring regulatory proposals for ensuring the healthy development of leverage.The text is discussed from the following aspects:1.A detailed study of this acquisition model of leveraged buyout,a more comprehensive analysis of its basic concepts,characteristics,typical transaction structure,and financing methods.Summarize and analyze the history and laws of the development of leveraged buyouts and analyze in depth the role and impact of oversight on leveraged buyouts during the development of leveraged buyouts.2.A detailed study of the legal environment and the problems exposed in the development process of leveraged buyouts in China,combined with the recent domestic high-leverage,high-premium acquisitions that have attracted the attention of regulators,focuses on the analysis of transaction structure,sources of funds,and information disclosure.And summarizes the risks that may arise from the company's operations,markets,and related investors as a result of highly leveraged buyouts under the current regulatory system.3.A detailed study of the regulatory laws and regulations for leveraged buyouts in China,the main body of supervision,and the content of supervision clarify the current regulatory system applicable to leveraged buyouts in China and focuses on the leverage of leveraged buyouts in light of domestic regulatory status.Sources and structures,financing instruments,and information disclosure rules and propose corresponding regulatory recommendations.