Research On The Impact Of LBO Multi-Level Financing On The Financial Performance Of Acquired Enterprises

With the development of the capital market and the rapid expansion of economic globalization,acquisition activities among enterprises have also become more frequent.LBO leveraged buyout is a way for companies to use their financial leverage to complete the acquisition of the target company,in order to enhance the economic efficiency of enterprises and increase investor returns.This kind of small-grand acquisition method can integrate resources,expand the economic scale,and maximize the value of the company.Therefore,it is increasingly favored by modern enterprises.However,with the increase in the size of mergers and acquisitions and the amount of mergers and acquisitions,the original merger and acquisition financing has been unable to meet the needs of business expansion.Under this circumstance,the innovation of the financing mode of leveraged buyout has become the top priority for M&A in China.Combining financial leverage with multi-level financing methods to achieve "snake swallow" mergers and acquisitions,under the current wave of mergers and acquisitions,it shows its unique high-risk,high-yield,high-tech characteristics,becoming the new darling of the capital market.The innovation of leveraged buyout financing has provided new business opportunities for Chinese companies and has also had a profound impact on China's capital market.Among them,the most direct is the impact of multi-level financing on the acquisition of the underlying business performance.The use of multi-level financing in leveraged buyouts has solved the problem of financing difficulties for enterprises and also removed obstacles for corporate mergers and acquisitions.However,the problems caused by the nesting of multi-level leverage funds are also very complex and serious,and may even cause the entire merger and acquisition transaction to die.China Huiyuan Communications(000586.SZ),a leader in the domestic telecommunications industry and a “restructured professional household” in the capital market,was leveraged and acquired by Fushun with three levels of financing.However,many restructurings ended in failure.At the same time,financial performance fell sharply.This article will Make a rational analysis of the case to get the effect of LBO multi-level financing on the performance of the bid target.It is believed that this study can provide valuable reference experience for the rational use of multi-level financing in China's corporate LBOs,and has greater practical significance.