A Study On The Financial Performance Of The Leveraged Buyout Of Kerr By Xiwang Foodstuffs

More and more enterprises choose to realize rapid expansion through merger and acquisition under the environment of better economic development and looser merger and acquisition policies.Leveraged buyout(LBO),as one of the ways of merger and acquisition,means that the acquirer uses the assets and future cash flow of the target enterprise as collateral to carry out the acquisition of the target enterprise through a large amount of debt.It originated in the fourth merger wave of the west in the 1980 s.In recent years,LBO has been applied more and more widely in Chinese merger and acquisition,and attracted the attention of scholars due to the particularity of its debt financing mode.This paper takes Xiwang Foodstuffs leveraged buyout of Kerr in 2016 as the research object and focuses on the analysis of its financial performance before and after the implementation of merger and acquisition,in order to provide some reference for enterprises who planning to adopt LBO.Firstly,starting from the analysis steps of the case part,this paper introduces the concept of LBO,motivation theory of merger and acquisition and the financial performance analysis methods used in this paper.The second is the case description,this part includes the general situation of Xiwang Foodstuffs and Kerr,the background of the acquisition,the acquisition process and the motivation for the implementation of this case.In terms of the financial performance analysis,as the body of this paper,it constructs a comprehensive and systematic analysis framework combining short-term and long-term financial performance.Among them,the event study method shows the short-term performance within 15 days after the announcement of merger and acquisition,the financial index method and tobin q ratio were used to analyze the long-term development trend of financial index and future development ability of Xiwang Foodstuffs.Through the above analysis,this paper concludes that Xiwang Foodstuffs obtained excess return by leveraged buyout Kerr in the short term,In terms of the long-term financial performance,its profitability has been significantly increased,but due to the influence of the debt financing,many indicators appeared to fall after rise trend,its financial performance of enterprise management gradually decline,and Xiwang Foodstuffs' prospects are worrying.At the end of the paper,this paper points out the problems and solutions of this case found in the analysis,and draws relevant enlightenment from this case of LBO.LBO can effectively solve the problem of financing difficulty for some enterprises whose own funds are not enough to pay the consideration.Therefore,LBO occupies a large proportion in the merger and acquisition in China in recent years.However,due to the great difference in the development of financial markets at home and abroad,it is difficult for China to learn from foreign LBO models.Therefore,this paper draws relevant enlightenment through the study of specific leveraged buyout events,hoping to bring useful reference to such leveraged buyout in China.However,this paper only studies individual cases,and has not drawn regular conclusions and references,which need to be supplemented in the future relevant studies.