Study On The Pricing Problem Of Management Buy-Outs (MBO) In China

An MBO involves members of the incumbent management team acquiring a significant equity stake as individuals with institutional support in order to control the company and to get expect prospective return, after that the corporate equity and capital structure was changed. With the setting-up and perfection of the socialist market economic system in China, following the state-owned enterprise reform, the phenomenon of MBO got to enter people's vision and was put into practice.This paper just focuses on the pricing problem of MBO in the present situation of China. Compared with the present pricing way which is not reasonable, a relatively reasonable method is brought out. There are six parts in this paper.Part One is the introduction, which states the background,significance, approaches, logic route and possible originalities of the research in this paper. The MBO's developing history is also introduced in this part.Part Two is about the reasons which affect the pricing of MBO in China. The author found these reasons from analyzing the internal and external environments of enterprises.Part Three is about the evaluation methods of company's value. In this paper, Discounted-Cash-Flow method is considered to be more scientific. Based on it, a relatively scientific pricing method of MBO is determined.Part Four focuses on the problem of the managers' history contribution. Managers' history contribution is a necessary factor considered during MBO pricing process. In this paper, Mufti-hierarchy Fuzzy method is applied to make the managers' history contribution quantified. This result can be converted buy capability. Thus, the final price is determined.Part Five is about some problems else on MBO, including the negotiation process and the law or rules on MBO.Part Six is the conclusion of the paper. This part also puts forward some issues needed to study further.