Research On Financing Structure Selection In Leveraged Buyouts

In the 1980 s,the first large-scale leveraged mergers and acquisitions of KKR in the United States symbolized the rise of leveraged mergers and acquisitions around the world,and this was followed by the tide of leveraged buyouts.Leveraged acquisitions are a very expensive way of acquiring mergers and acquisitions.For the financing of enterprises,a key factor for the smooth progress of the financing is the financing structure to be discussed in this paper.The sources of leveraged buyout financing can be divided into two categories.The first category is debt,which is characterized by high cost and high return.The second category is equity,which is characterized by low cost but scattered equity.The financing structure refers to debt and equity.proportion.Different financing structure ratios will affect the financing cost of enterprises and the amount of income,which will affect the control and governance structure of enterprises.Therefore,this paper will focus on the financing structure selection of leveraged purchasing enterprises.This paper begins with the relevant literature review.On the basis of theoretical analysis,it first reviews the relevant theoretical basis of leveraged buyout,analyzes the main purposes and advantages and disadvantages of leveraged buyout,and analyzes the practice of this financing method in China.Then it expounds the relevant theories of the choice of leveraged buyout financing structure,the current financing methods and financing structure,and the cost and return of different financing structures.Furthermore,it is found that there is a lack of research on how to choose a financing structure for corporate leveraged buyouts.Therefore,after analyzing the current M&A market in China,this paper selects the case of Geely Automobile Company's acquisition of Volvo Company,adopts the earnings-free method of earnings per share,and analyzes the risks and benefits before the acquisition to make financing structure decisions and study its structure.The choice is optimal,and the performance analysis after the merger is used to evaluate the effect of the merger.Research indicates:(1)The Times m&a financing way is mainly for the syndicated loan,followed by convertible bonds and warrants;(2)before m&a financing structure choice risk is mainly for the financing risk;(3)in acquisition model calculation under geely group choice of financing structure is not optimal;(4)after the merger geely company performance overall performance is good,the more successful The Times m&a.Through the above conclusion is put forward in this paper:(1)to broaden the financing channels,a combination of leveraged acquisition policy;(2)to avoid debt financing risk in the choice of financing structure,choosing structure financing risk;(3)pay more attention to optimize the financing structure,improve the asset-liability ratio as far as possible in a reasonable range;(4)the government should speed up the relevant incentive policies,guide enterprises to use leveraged buy-outs,relax for financial regulation,gives the market a greater degree of freedom.