MBO financing model of a typical
|School||Capital University of Economics|
|Keywords||MBO financing mode Directed Bonds Private Fund Trust|
The development of Management Buyouts (MBO) in China has gone through a different process. Management Buyouts become a hot topic in academia and the business community since 1997 when the first MBO case took place as the reform of state-owned shares and the attempt of equity incentives. However, in 1997 China’s economic development is still in its early stages, the capital market has just started, and the depth and breadth of capital markets are not in place. Financing is the difficulty of developing Management Buyouts, and the key to the implementation of MBO financing are how to Finance and financing structure. Based on the comparison of Chinese and foreign management buyout financing model, writer put forward to suggestions of the Management Buyout financing.This article is divided into three parts. The first part of this paper focus on explaining the background of MBO in China, Determining the contents and methods of research, summing up the meaning of MBO, as well as its characteristics and practical significance to China.Based on the explaining of the development history of the MBO theory, writer analyzed and summarized the successful models of MBO financing in Europe’s markets. The position and role of financial intermediaries and private Equities have been particularly discussed.The second part is divided into three sections. In the first section,58 companies have been observed from 1997 to 2006, all of these have tried to product MBO. What’s more, regulatory laws and regulations on the acquisition financing are listed on centralized order. In the second section, writer summarized the typical modes of MBO from operation, financing characteristics, problems, etc. In the third section, Cebeco-Handelsraad food company and Sina are selected as typical enterprise, writer analyzed their MBO financing and situations after the completion of MBO.The third part is conclusions and recommendations. The author believes that the MBO of private enterprises have promising future and MBO will greatly promote the development of private enterprises in China. The authors recommend that intermediaries and private Funds should play more active role in the future; government should push harder to build a multi-level capital market and to invent innovative financial instruments; try to issue directional bonds.