The Successful Path of Management Buyouts

Author: Wei Jian
Publisher:
Publish Date: 2005-04-01
Features: This book has two distinct features:
First, theoretical innovation. Based on existing theories, we propose a theoretical framework that explains the dual nature of management buyouts—efficiency enhancement and wealth transfer—as well as the role of external environments (such as investor protection levels and effective M&A market procedures) as constraints on its development path. Due to China's low level of investor protection and limited effective M&A market procedures, management buyouts have an inherent tendency to develop into channels for wealth transfer. However, management buyouts have indeed brought effective outcomes to state-owned enterprise reforms, such as shareholder screening and improved incentives, leading to their predicament in China. Thus, we theoretically explain the of management buyouts in China and point out future directions. The proposed theoretical framework also breaks the current trend of domestic research, which either focuses on practice or merely describes phenomena, advancing the study of management buyouts by one step.
Second, rich and in-depth case studies. We not only provide detailed and thorough introductions to domestic management buyout cases of different types but also meticulously compile multiple management buyout cases from the UK and the US based on the data we collected. For each case, we organize the factual details into three parts: acquisition background, transaction arrangements, and post-acquisition changes. Then, we conduct in-depth analysis based on the characteristics exhibited by the cases themselves and the needs of theoretical analysis. These cases not only enrich our understanding of the operational practices of management buyouts but also clearly highlight the differences between Chinese and foreign management buyouts, thereby providing a foundation for theoretical construction.