Management Buyouts And Implications For China

Management buy-outs (MBO) is one type of leveraged buy-outs (LBO). MBO is financed with high level of debt. MBO is a new type of organization structure leading to fundamental changes in the way management manager, and hence to real value increases. Sound theoretical reasons exist for believing that ownership may lead managers to be more efficient conscious, more innovative, and to pull together as a team focused on organizational rather than private goals.This article is about management buy-outs and more. The article tools of agency theory and organization costs theory and so on. It's purpose is unveiling that MBO can be use and prevail in the revolution of Chinese firms in future.The article is organized into seven parts: in part one, it introduces MBO; in part two, it reviews the theory of MBO; including the theory of holdup activity-specific investment, agency theory and the theory organization costs; in part three, it analyses the revolution of Chinese firms by two angles: incentive system of managers and the ways of Chinese firms' revolution; in part five, it discuses the motivational aspects on Chinese firms applying the ways of MBO; in part six, it discusses the stakeholders of MBO, especially in Chinese firms; in part seven, it describes the practice problems of MBO in China and gives some advises.