MBO financing problem in

MBO financing, including debt financing, equity financing and quasi-equity financing of three.


First, the developed countries, the financing of management buyouts Experience

(A) diversified financing model
MB0 diversified financing model developed in two aspects: First, diversified sources of financing, MBO financing sources include: banks, insurance companies, investment banks and other lending institutions, pension funds, venture capital and other institutional investors. II is diversified financing structure, that is, debt financing, equity financing and quasi-equity financing in the same case simultaneously.

(B) a strategic institutional investors qualified
Strategic investors in the major role in the MBO: The long-term investment, to promote long-term development of enterprise management to the strategic restructuring; by holding equity capital to participate effectively in the management of post-acquisition restructuring and supervision, restraint, control and management layer of management behavior, promote corporate governance structure optimization and restructuring after the acquisition; professional investment Experience through their own advantage, to reduce the lack of small and medium investors to bring investment professional blindness. In addition, institutional investors also have the strategic financial capacity, diversification and other characteristics, helps reduce investment risk, to a certain extent, to resolve potential personal financial risk financing.

(C) of the ratchet mechanism
For the providers of finance for the MBO, MBO success depends on the target company's management's performance. Therefore, in the financing structure design, to consider the incentives of management. Foreign to ratchet mechanism, in which investors used to to the managers to incentive mechanisms, the performance of managers will determine their equity share.


Second, our management problems in acquisition financing

(A) the mode of financing and the financing structure of a single limited
First, external debt financing proportion; the second is the lack of external equity financing management buyouts, and between equity financing and debt financing, the lack of conversion tool; third, quasi-equity financing is not the case.

MBO debt financing based mainly borrowing, lack of credit, vendor financing, corporate bonds, subordinated notes, commercial paper and other mixed use financing, because the creditor can choose less, not more than investors with signing long-term borrowings and short-term debt contracts diversified lending, leading to excessive concentration of financial risk, especially interest rate risk.

(B) financing behavior is not standardized
The case of management buy from the point of view, many listed companies did not follow the <<Securities Law >>,<< Law>> required to disclose material information as specified in the disclosure announcement MBO funding. Main reasons : First, the legal source of financing for small management groups are rich, but compared with the huge amount of purchasing funds is still small, bank loans and 不可行, and insurance companies, securities companies conduct business in the enterprise can not provide direct financing ; Second, a lot of money demand and lack of supervision led to management irregularities. reposted elsewhere in the Research Papers Download http://www.hi138.com (c) excessive government intervention
Since the existence of government intervention in the calculation of demand for M & A financing, the situation faced by different companies differ, resulting in some enterprises acquire the target company at a low price, financing, less pressure, the other part of the financing of enterprises are facing heavy pressure, which hindered the development of finance market fair. Some local governments to encourage enterprises to actively carry out reform of property rights, the state-owned SME MBO, in particular, the acquisition of non-listed companies to give great support.

(D) highlights the issue of risk transfer financing
The basic principles of financial transactions is the symmetry of risk and return, by the target company to obtain equity financing is financing the management of stakeholders. Western MBO financing is a typical case: the acquisition of the management company to set up a sheet of paper outstanding issued shares of the target company more than 90%, and then further concentrated ownership structure, the target company and the merger of paper, intermediary agencies to ensure that management and privatization. by adjustment of the target company's financial structure, making it the ultimate leverage financing MIBO burden. MBO cases in China more than the target company's management through the SPC (special purpose company) financing from other institutions or individuals acquire a controlling stake in the target company. Since the average of the management stake after MBO only 25% of the target company can not be achieved privatization. At present, our imperfect Laws and regulations, corporate governance mechanism is not perfect situation, despite restrictive regulations, management adjusted the target company's financial structure, financial risk will be transferred ultimately to the target company.


Third, the financing of management buyouts Suggestions

(A) the introduction of multi-level strategic investors
Significance of MBO is that the introduction of strategic investors: to reduce the pressure and the repayment of the financing of management pressure to address the sources of funds management buyouts legalization and standardization; through the introduction of strategic investors to establish the price discovery mechanism for the transfer of state-owned assets, so that the transfer of state property tend to fair pricing and rationalization, which the government and the recognition of stakeholders; strategic investors to promote the enterprises to establish modern corporate governance structure, management buyouts to avoid a "dominance" of the drawbacks to achieve structural transformation and mechanism innovation; domestic and foreign strategic investors into funds, diversify their ownership of large enterprises, SMEs to achieve full acquisition. Therefore, the introduction of strategic investors through the means of financing the MBO will change our existing financing mechanisms, to provide a wide range of MBO sources of financing, favorable financing structure optimization and enterprise after MBO stable and healthy development.

(B) the development and use of innovative financing tools
MBO financing should try a new type of financing instruments, such as preferred stocks, convertible bonds.

(A) Preferred Stock Financing
Preferred shares can increase mobility and choice, and reduce the uncertainty of income investors. Preferred stock financing channels contribute to the expansion of corporate finance, wealth of varieties to meet the investment needs of various types of risk preferences.

(B) of the convertible bond financing
Advantages of convertible bonds ways: First, low-cost financing, reduce the financial burden. Second is the use of premium, high prices for equity financing.

(C) reduction of Government Behavior in Mergers and Acquisitions
MBO in the enterprise, government support, guidance, supervision and services are essential. Driven by the interests of enterprises, trade and regional economic behavior of the main market for the transfer gradually, rather than the will of the highest political level of government for the transfer. Therefore, the government should let the market space in time, from the market's major players and exit of commercial competition, a variety of resources to focus on macro-control behavior of the various stakeholders.

(D) strengthen the financing of a wide range of structural design
From a technical point of view, MBO program involving pricing, finance, legal and business integration in four areas, financial intermediaries need to provide professional, high standard of service and technical support. Financing agency refers to the planning, arrangements, participation, MBO process integration consultancy institutions, including investment banks, Lawyers, accountants, management consultants, asset evaluation. which play a key role in investment banking. professional investment banking institutions in the acquisition of MBO has a triple role: first, financial advisers, MBO during , financial adviser to the company's financial structure, financial controls and corporate governance and other aspects of management and control to ensure the normal development of enterprises; Second, equity ownership, that financial advisers put their own capital, to become shareholders, with the participation of other MBO risk with a partner; third equity investment community supervision agent.

(E) strengthening the management buyout financing for information disclosure and regulatory
First, strengthen the MBO process, openness, refine the acquisition process of information disclosure system, such as the acquisition of the purpose of pricing mechanisms, such as restructuring after the acquisition. Second, the introduction of a third party in the negotiations. Including independent financial advisers and independent directors, avoid the formation of management and internal pricing on behalf of the state-owned shareholders; Third, the dynamic regulation of the MBO enterprises. supervision period can be traced back before the takeover and acquisitions a few years after years. If the act before the acquisition, performance occurred volatility, or the results of acquisitions completed fluctuations, external audit adjustments identified as due to human causes, or the viability of potential causes, in order to make further processing.

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