Chapter 16 What is a real MBO?

Management buyout in the United States refers to the behavior of the company's management to purchase all or part of the company's equity to achieve substantial control of the company.In a narrow sense, MBO refers to the management buyout of the company, and in a broad sense, it also includes management buyout of other companies.It has been nearly 30 years since the emergence of MBO. The evaluation of its role is mixed, but generally speaking, most of the elements are positive.We always like to use the successful practices of the United States as an example, so when the state-owned enterprise reform methods are exhausted and there is no way out, we naturally think of the "panacea" such as MBO.The reform of China's state-owned enterprises is a test field for reform methods around the world. We have used almost all the things in foreign countries either directly or in disguise.Will MBO really become the savior of Chinese state-owned enterprises?

To answer this seemingly simple question is not simple.Because the institutional background, legal environment, and cultural history of the United States and China are so different, the same concept will become completely different things in the two countries, and the results will be very different. We review the history and content of MBO in the United States in order to understand MBO soberly and objectively, and consider the feasibility and possible consequences of implementing MBO in China on this basis.Through comparison, we can find that under an unsound legal system, almost every aspect of MBO can become a trap for encroaching on the interests of the company and shareholders. MBO should not be the straw for China's state-owned enterprise reform.The current economic and social situation in China is no longer able to bear unnecessary mistakes.

The origin of MBO has always been controversial, and a popular saying is that it originated in the 1960s and 1970s.The first MBO is closely related to the KKR company in the United States. In 1976, KKR, founded by Americans Kohlberg, Kravis and Roberts, decided to acquire a branch factory of Rockwell that manufactured gear components.In order to achieve the goal of a smooth acquisition, KKR has adopted a different method than before. He united with the managers of the acquired company instead of preparing to fire them, and promised to give the management a certain percentage of equity in the future, so as to obtain the approval and support of the board of directors of the acquired company. . KKR eventually acquired the branch at $1 per share, with managers holding 20% ​​and KKR holding 80%.After the acquisition, KKR reformed the company and implemented a series of cost reduction measures. Five years later, KKR re-sold the so-called "simple and efficient" company that had been dressed up for $22 per share, earning huge profits. Nine former senior executives also became rich.This is the origin of the so-called MBO.

KKR has used this approach with repeated success.From 1977 to the end of March 2006, KKR has completed more than 135 acquisitions, with a cumulative total transaction volume of US$192.965 billion. The role of MBO in the process of KKR's fortune is undoubtedly huge. The MBO acquisition method created by KKR was gradually favored by those managements who wanted to own the company. Coupled with the relatively favorable economic situation and legal environment at that time, MBO quickly became a trend. Although KKR in the United States pioneered this form of acquisition, MBO was noticed and named by academic circles thanks to British economist Mike Wright.His research in 1980 found that a considerable part of the companies that were split or spun off by the parent company in the UK at that time were sold to the management that originally managed the company. In 1981, the University of Nottingham held the first MBO global conference, and since then the research and practice of MBO has spread rapidly.

After reading the birth of MBO, we will find that the original intention of MBO is not the hard work of the management to improve the company's performance, as we Chinese imagined.Its earliest sponsors were investment bankers. When they joined the management team to carry out company acquisitions, their ultimate goal was definitely not to consider how the acquired company could develop better and in the long run, but for the rapid accumulation of their wealth.This can be seen from the characteristics of the target company they selected: stable cash flow, low debt ratio (leverage buyout is required for acquisitions, and the high debt ratio of the original company will lead to an increase in acquisition costs), large room for profit improvement, etc. .All these characteristics are for KKR to sell the company again in preparation for high profits in the future.KKR is not interested in companies that are really in crisis.This important node is probably beyond the imagination of domestic experts and scholars advocating MBO.

Most notable in KKR's stellar track record is one of the largest acquisitions in U.S. history -- the acquisition of food and tobacco king RJR Nabisco.The concept of MBO first influenced China through the famous book "Barbarians at the Gate: The Fall of RJR Nabisco", which described this acquisition. In 1993, Hollywood also made a movie based on it. In October 1988, the management represented by RJR Nabisco CEO (CEO) Ross Johnson proposed to the board of directors a management buyout of the company's equity, and planned to divest the company's assets after the MBO, and planned to sell the food business instead Keep the tobacco business.But KKR is acting as a competitor to management this time rather than a partner. KKR's intentions, at odds with management's, want to keep all of the tobacco business and most of the food business.Ross Johnson and KKR competed fiercely, and KKR finally succeeded in acquiring it at a sky-high price of US$25 billion on February 9, 1989, but the transaction volume reached US$31.3 billion.Major US syndicates, major Wall Street investment banks Merrill Lynch, Morgan Stanley, Walter Stamperella, and Drexel of junk bond tycoon Michael Milken all participated.Among the funds invested in the acquisition, syndicated syndicated loans amounted to US$14.5 billion, and Drexel and Merrill Lynch provided US$5 billion in bridging loans. KKR itself provided US$2 billion (of which US$1.5 billion is still equity), and another US$4.1 billion was provided as preferred stock, US$1.8 billion was used as convertible bonds, and it received US$4.8 billion in foreign debt owed by RJR.As the losing party, the original company CEO Ross Johnson also received a pension of 53 million US dollars.However, the results of KKR's acquisition are not ideal. In 2005, KKR sold its entire stake in RJR Nabisco at a mediocre rate of return.

The reason for mentioning this case is that the understanding of MBO in China started from the book "Barbarians at the Gate: The Fall of RJR Nabisco" and this case in the book.Due to the propaganda and exaggeration of the so-called mainstream scholars in China, the domestic understanding of the book and the case was one-sided at the beginning, and even regarded this acquisition as a positive case of MBO.However, the MBO in the book is not a successful case. Moreover, the book is popular because it describes the power struggle on Wall Street in detail. What is a model for companies to improve performance, clarify property rights, and establish incentive mechanisms.If we have to say that this book can be used as a reference for Chinese MBOs, then the biggest reference is the competitive bidding.At least bidding can guarantee a certain degree of fairness in pricing.But unfortunately, the MBOs in China are all black boxes designed by the management itself, and others cannot intervene, and there is no such thing as bidding.

The so-called MBO by Chinese experts and scholars is to reduce agency costs, motivate management, and improve company performance and governance levels, etc., are just ridiculous thinking of China's reform.There are no such so-called high-sounding reasons for the origin of MBO in the United States.In a word: MBO is just a profit-seeking tool for investment bankers. There have been 5 major M & A waves in the history of the United States.According to the summary of the famous economists Shleifer and Vishny, these five trends have their own characteristics and backgrounds. They are: 1890s, industrial consolidation before antitrust restrictions (e.g. U.S. Steel);

1920s, antitrust restrictions on business mergers financed by stock; In the 1960s, large conglomerates (such as ITT and Teledyne) were formed in the face of strong anti-trust restrictions; In the 1980s, large enterprise groups were decomposed through debt financing, and the company's business was repositioned; In the 1990s, corporate mergers backed by equity financing emerged in response to technological change and expanding international markets. MBO flourished in the fourth wave of mergers and acquisitions in the 1980s.At that time, American companies generally had the problems of redundant organization and low efficiency caused by diversified operations.In 1994, Rene Stulz and I published an article in the authoritative economics journal "Political Economy", which studied the impact of American corporate diversification on performance in the 1980s.The results of the study show that diversification does not improve corporate performance, but reduces corporate value.

In order to get rid of the shadow of diversification failure, the company has carried out large-scale divestitures of corporate assets, sold cumbersome subsidiaries and branches, or completely withdrawn from certain specific industries to redefine the company's core business.The original business of some companies will be sold, and the management of the enterprise will become a more convenient successor, which greatly promotes the popularity of MBO.About 20% of management buyouts in the United States come from corporate asset divestitures.It can be said that it is precisely because of the demand for asset stripping and separation that it has become popular.

The 1980s was the most prosperous period for MBO in the United States.The following table shows the situation of public companies going private due to acquisitions from 1979 to 1988. Since such acquisitions include MBO, the trends of the two are roughly the same.So from this table we can still judge the general situation of MBO. From the above table, we can see that in the 1980s, there was a climax in the mergers and acquisitions caused by the divestitures of the company's subordinate departments, as well as the overall mergers and acquisitions of the company.In most years, divestitures resulted in more acquisitions than companies as a whole, with 144 deals worth $9.5 billion in 1986.And the number of companies being acquired by the entire company is also rising steadily.The number of companies accounting for the proportion of public acquisitions in the United States increased from 6.4% in 1979 to 26.9% in 1988; From 4.1% in 2018 to 39%. The 1988 figures include the largest leveraged buyout in history, KKR's acquisition of RJR Nabisco. Accurately represents the position of leveraged buyouts of privatization nature in the securities market.The "going private" mentioned here refers to the acquisition of a public listed company by the management or other individuals or private organizations, which is not exactly the same as what we mean by the privatization of state-owned enterprises.The United States generally treats listed companies as public companies rather than private companies.The data in this graph is roughly the same as the data in the previous table (from Jensen), and can be used as a suitable indicator to reflect MBO.We saw a sudden spike in leveraged buyouts in the 1980s, peaking in 1988 at about 2.5% of total stock market capitalization, and then plummeting and almost disappearing. After 1992, although the absolute transaction volume of leveraged buyouts increased, their share in the stock market was far from being comparable to that in the 1980s. MBO in the 1980s generally took place in mature industries, such as retail, food processing, and clothing.These industries are in a lifecycle where you have big cash or cash equivalents.Management buyouts of such companies can enhance their borrowing capacity by virtue of their stable cash flow.However, those emerging industries or high-tech companies generally do not become the targets of management buyouts due to their high risks and low cash flow. After the glory days of the 1980s, MBOs and leveraged buyouts entered a low ebb in 1991-1992.Due to the economic recession in the United States at that time and the "Financial Reform, Recovery, and Enforcement Act" introduced in 1989 had certain restrictions on banks' participation in leveraged buyouts, MBO and leveraged buyout activities shrank rapidly, and the transaction amount dropped sharply to US$7.5 billion. However, after 1992, the improvement of the US macro economy and financial innovation encouraged MBO and leveraged buyouts again. After 1992, the amount of acquisitions continued to rise, making the acquisitions in the 1980s into a child's play.For example, in 1996, the leveraged buyout industry (including MBO) invested a total of 18 billion US dollars in acquisitions, which exceeded the amount of investment in any previous year.Industry observers believe that this is an unprecedented record, but to their surprise, the amount of investment has continued to rise. By the end of April 2005, leveraged buyout companies had completed transactions worth US$26.4 billion. At this rate, They are on track to surpass the 2000 peak of $74.7 billion.However, the relative position of leveraged buyouts in the overall market has never surpassed that of the 1980s. From the history of mergers and acquisitions, the purpose of MBO in the United States has the following situations: 1.External investment institutions give the management shares of the target company and obtain their support for the acquisition; 2.Large conglomerates divest discrete assets.The segregated assets are sold to management; 3.Management seizes ownership of the company in order to start a business, and usually they will cooperate with external investment institutions for financing acquisitions.The target company can be either the company or other companies; 4.Major shareholders exit.When a major shareholder voluntarily withdraws from the company, in order to be responsible to the shareholder and avoid large fluctuations in the stock price, the method of selling to the management is adopted; 5.The company is delisted.Listed companies are more constrained by rules than non-listed companies. In order to achieve the purpose of getting rid of the restrictions of listing rules, the company sells its equity to the management; 6.Anti-takeover.When a company encounters the threat of hostile takeover, management buyout can be used as an effective means of defense. The background of the rise of MBO in the United States is completely different from the background of China's MBO at the present stage.We see that among the above purposes, none of them are completely consistent with the purpose of China's MBO.Although American MBO may lead to improved corporate performance (in fact, this point is also divided in empirical evidence), but that is only an objective result, not an end.The purpose of China's implementation of MBO is to motivate the management, transform the operating mechanism of the enterprise, and save the state-owned enterprises. The essence is to try to bring the enterprise back to life through the privatization of property rights.So I wonder how the Chinese MBO advocates think they learned from the American experience and turn MBO into a magic panacea.This is completely unfounded, and there is no such thing in the United States.Moreover, even in the 1980s when MBO was at its peak in the United States, it failed to become the mainstream of foreign acquisitions. In contrast, acquisitions by external companies that did not involve company management were still the majority. The only purpose of the American MBO that can be related to the Chinese MBO is the need for the management to start a business (but remember, the purpose of the Chinese MBO is not to let the management start a business, but to actually become a management start-up in the process of operation. Chance).But I think this is not a place worth learning from.Even in the United States, management achieves entrepreneurial goals by controlling and owning their own companies, which is essentially against the ethics of professional managers.However, the United States has a check and balance mechanism and a strict legal environment, so that the management must always consider that the interests of the original shareholders will not be damaged during the MBO process, otherwise he is very likely to be driven out by the shareholders and end up with nothing.If we open the textbooks introducing foreign MBO, we can easily find on the first few pages that "manager's fiduciary responsibility" is regarded as the basic principle that must be followed in the process of MBO.In China, we do not have a standardized legal system to ensure that the MBO's state-owned assets and rights of minority shareholders are not damaged.In practice, how many executives have considered the interests of shareholders?And which minority shareholders have the ability to expel executives? Therefore, the experience basis of China's MBO is not inspired by the United States.On the contrary, there are two other countries that are somewhat similar to China's MBO: one is the UK, and the other is Russia.But these two countries should be treated differently.The prosperity of MBO in Britain is different from that in the United States. It emerged during the privatization of state-owned enterprises in the era of Mrs. Thatcher.The British government allows the ownership of state-owned enterprises to be transferred to managers, employees, and other ordinary residents who are willing to buy shares, rather than completely selling the enterprise to the management.More importantly, the British government proposed three laws for the privatization of state-owned enterprises, which became a powerful measure to protect shareholders.The first step is to hire professional managers to manage the state-owned shares under the condition that the state-owned shares remain unchanged; the second step is to privatize the state-owned enterprises only if the professional managers manage them well; the third step is for the British government to For the privatized company, one gold share is reserved, that is to say, if the major decision-making of the privatized company affects the interests of the common people, the British government will have the veto power.This policy enabled the British government to take the initiative and avoid possible harm to ordinary investors in the privatization process (including MBO).None of the good measures of privatization in the UK can be achieved in China's current MBO, so there is no way to guarantee that shareholders will not be infringed during the MBO process. The closest to China's approach is Russia's MBO in the process of privatization.During the privatization process in Russia in the 1990s, half of the large companies were bought out by management.But under the background of a chaotic legal system at that time, the ending of the Russian MBO was frustrating.If China implements MBO on a large scale, it will definitely lead to the realization of privatization, but it may not be able to realize the turnaround of state-owned enterprises, and the outcome cannot guarantee that it will not be the second Russia.Moreover, more critically, there is no reason for Chinese state-owned enterprises to carry out MBO.The strongest reason for Chinese state-owned enterprises to implement MBO is that MBO can revitalize state-owned enterprises.But this is a strangely unconvincing reason.We assume that the current state-owned enterprise is doing well and is a leader in the same industry, then we have no reason to implement MBO, because the enterprise has already done well and there is no need to use MBO to save it.If the business is doing poorly, it is necessary to analyze what causes the poor performance.If it is caused by systemic risk factors such as industry influence, economic policy or economic cycle, then MBO cannot change these risks, so MBO has no decisive role.And if the management ability is poor, we can't give him equity.What kind of logic is it to be able to get equity with poor ability!It is a violation of a fundamental fiduciary duty if management is competent but fails to do its due diligence and waits until the business is given to him.Let's think about it briefly. If you are a shareholder of the company, you hire a manager and pay him the salary he deserves, but the manager refuses to work hard and has to wait for the company to be given to him before giving up.Is such a housekeeper competent? As a professional manager of a state-owned enterprise, it is necessary to do a good job in the enterprise, and it is an unshirkable fiduciary responsibility.I always think that there is no necessary causal relationship between whether a manager contributes to the enterprise or not and giving him an MBO.In order to achieve the purpose of motivating the management, it is absolutely possible to give him a higher salary and better treatment, and it is not necessary to sell the company to him.According to the logic of "MBO is necessary for a successful enterprise", there is almost no need for a joint-stock company to exist, and it has to become an individual manager to do a good job.However, the female CEO of Hewlett-Packard, GM CEO Welch, and the chairman of Nasdaq have made such great contributions, but they have not turned the company into their own, because the trust responsibility in the hearts of these professional managers in the United States is that of professional managers in my country. What people don't have. What's more, in reality, these contributing state-owned enterprise managers have not been treated badly.The employees of the enterprise are also those who make contributions to the enterprise. Although their contribution may be far less than that of the manager, the difference in interests between them and the manager is astonishing.Li Yizhong, deputy director of the State-owned Assets Supervision and Administration Commission, said at the meeting of heads of central enterprises that statistics show that the average annual income of employees of central enterprises increased from 19,700 yuan in 2002 to 24,000 yuan in 2003, and the income of managers increased from 250,000 yuan in 2002. It increased to 350,000 yuan at the beginning of 2003, which was higher than the growth rate of employees' income. Although it was adjusted later, it dropped to 325,000 yuan, but the gap was still 13.5 times (reposted from "Legal Daily" by Xinhuanet on August 14, 2004) .On the one hand, the salaries of managers have reflected their higher value compared with ordinary employees. On the other hand, if the real income is to be calculated, how should the "on-the-job consumption" of the bosses of state-owned enterprises be calculated?In today's China, on-the-job consumption has become an important hidden source of income for managers of state-owned enterprises, which far exceeds their nominal wages, while ordinary workers have no chance to enjoy this kind of treatment. Advocates of MBO have always complained about the low income of corporate managers, but never mentioned their free enjoyment.Moreover, if the company does not operate well, what qualifications do managers have to demand such high remuneration? If the management wants to start a business, they can completely rely on their own ability and financial resources to start another business, making money penny by penny like the businessmen in Wenzhou, instead of waiting for opportunities to seize state-owned assets. Furthermore, those who advocate the MBO of state-owned enterprises have a logical fallacy.They talked a lot about MBO, but they only targeted state-owned enterprises, and never proposed MBO for private enterprises.You should know that American companies are basically private companies, and MBO also happens to the management of private companies.Why does MBO only target state-owned enterprises in China?If MBO is really so good, why don't Chinese private enterprises ever operate MBO?I think that probably no private entrepreneur is willing to hand over the foundation he created to his migrant workers (professional managers), even if the company is facing a temporary business crisis.Since private entrepreneurs are unwilling to MBO, why can the property of the country be transferred to the management at will!I know that before the 1990s, the employees of state-owned factories in China always advocated "taking the factory as their home", respecting and loving the state property as their own property, and any act of stealing state property was considered despicable and shameless .But today, why is such behavior so popular, and it is also named as clarifying property rights, motivating management, and improving governance!I really don't understand.The only thing I understand is: MBO is a typical trampling and contempt for state-owned property rights. One of the most important aspects of MBO is financing.Since the management itself does not have sufficient financial resources to purchase equity, it must resort to external financing.The success or failure of financing is directly related to the success or failure of MBO.In the case of MBO failure in the United States, it was mainly caused by poor financing.Financing mainly comes from two channels, one is equity financing and the other is debt financing.The so-called equity financing means that the management can directly use its own funds or cooperate with a private equity firm (Private Equity Firm) to directly purchase the equity of the target company.For example, KKR is a typical private equity company. Generally speaking, 10%-20% of the funds required for MB0 projects come from limited-term equity financing, but after about 5-8 years, equity investors will gradually withdraw by selling their shares or transferring them to the management.Institutional investors who invest in MBO in the form of equity can usually obtain a return of 30%-40% of annual comprehensive income.However, if the company fails after the acquisition, it may also suffer losses. If the acquisition amount is huge, it is difficult to complete the acquisition solely relying on the strength of the management and private equity companies, and must rely heavily on debt financing to complete the acquisition.It can be said that without debt financing, there would be no success of MBO in the United States.MBO in the US has been co-existing with leveraged buyout (Leveraged Buyout).Debt financing in turn includes bank loans and corporate bonds.Corporate bonds are composed of senior debt (also translated as senior debt) and subordinated debt (subordinated debt). Senior debt occupies the largest proportion of MBO financing, and usually at least half of MBO funds come from senior debt.Senior debt consists of two parts: revolving of credit and senior term debt.Bond issuance is mortgaged by the company's current assets and long-term assets, and such bond financing is mainly provided by relatively conservative commercial banks, insurance companies, and savings institutions.Holders of senior bonds can receive priority repayment from the cash of the target company and income from asset sales. The debt risk is minimal, so the interest rate requirements are also relatively low, generally between the base rate and the base rate's upward movement of 3 percentage points. Subordinated debt also plays a very important role in MBO financing, and 15% to 30% of the financing amount is composed of subordinated debt.The financing period of subordinated debt is usually 6 to 10 years, but the redemption must be postponed to after the senior debt, and it is also limited by the expected cash flow after paying the senior debt. The interest rate cost is usually 2 to 8 years higher than that of the senior debt. percentage point.Subprime debt includes Bridge Loan, deferred payment bonds, junk bonds and other varieties.We feature junk bonds in particular because of their pivotal role in American MBOs in the 1980s. Junk bond in English is Junk bond. Junk means second-hand goods, fake goods, waste products, cheating, etc.Junk bonds are bonds that have not been rated by rating agencies. They have high investment interest (generally 4 percentage points higher than treasury bonds), high risks, and weak protection for investors' principal.Junk bonds originated in the United States in the 1920s and 1930s. At that time, they were mainly issued by small companies to raise funds for business development. In the early 1970s, their popularity was less than 2 billion US dollars. After the 1970s, due to the huge capital demand generated by MBO and leveraged buyouts, neither equity nor bank loans could meet the needs, so junk bonds became the most convenient financing channel. In the 1970s, junk bond issuance accounted for 4% of all corporate bonds. By 1982, the junk bond market was greatly stimulated because subordinated bonds could also be publicly issued to insurance companies, pension funds, venture capital, other institutional investors, and the public. The prosperity of the country, the junk bonds issued that year reached 6% of the total amount of corporate bonds in the United States, and even reached 15% in 1985. In 1988, the total market value of junk bonds was as high as $200 billion.The peak of junk bonds also marked the peak of MBOs and leveraged buyouts in the US.The aforementioned junk bond king Michael Milken and his Drexel company were once the big winners in issuing junk bonds.But after Milken was arrested in the late 1980s, the junk-bond era collapsed. Although junk bonds have played a positive role in promoting the US MBO market, they have also brought about huge negative effects, including the bankruptcy of the savings and credit industry, the vicious development of leveraged buyouts, the serious chaos in the bond market, and the increase in financial crimes. The following example represents a typical financing structure in an American MBO. Techway is a real technology services company, but the author has used a corporate pseudonym to respect the companies involved.This is a typical management leveraged buyout after the 1990s, and the industry is no longer a traditional mature industry.The acquirer used revolving loans, issued senior bonds, issued preferred shares, issued ordinary shares, and reinvested original shareholders to raise funds.Among the total financing amount of US$103.3 million, equity financing is as high as 48%, but debt financing still accounts for nearly 52%.Due to the decline of the junk bond market in the late 1980s and the abolition of the Glass-Steagall Act in the United States in 1999, the proportion of equity financing in American MBOs has increased, but high debt financing is still the mainstream in leveraged buyouts and MBOs . In the case of Techway, equity financing reaching 48% is also extreme.In most cases, the equity financing of American MBOs is maintained above 70%. From the perspective of the use of funds, the funds raised are mainly used to pay the original company shareholders, and a small part is used as acquisition expenses.After the acquisition, the company's shareholding ratio has fundamentally changed.Equity investment institutions invested US$3.6 million in common shares, accounting for 76.5% of the total investment in common shares; invested US$4.14 million in preferred shares, accounting for 90% of the total investment in preferred shares, and equity investment institutions became the absolute controlling shareholder.The management invested US$700,000 in the purchase of the company's common stock, accounting for 15% of the total investment in common stock, and the remaining shares were purchased by the original parent company through reinvestment. From the foregoing, we can generally understand the financing methods and structures of MBOs in the United States.We can clearly see that the biggest bottleneck to the success of American MBOs is financing, which relies on a well-developed bond market and active equity investment companies. Let's look back at the financing situation of China's MBO.My opinion is that China is basically unable to provide objective conditions for MBO financing at present.We currently do not have a developed bond market, and it is impossible to form a market such as junk bonds. As the regulator of the national securities industry, we will not allow such a market that has failed in the United States to revive in China.In the absence of strict legal supervision, the result of opening junk bonds can only be financial chaos.There are also legal hurdles to getting a loan from a bank.China's "Commercial Bank Law" stipulates that "commercial bank loans are generally not allowed to be used for equity investment"; Article 71 of the "General Loan Rules" clearly stipulates that the borrower shall not use bank loans for equity investment, and the acquirer cannot use the acquired company's Assets are used as collateral to obtain loans from commercial banks.As for equity financing, there are not many institutions in China that specialize in MBO like KKR. Even if there are, their financing power is limited, because even in the United States, such companies mainly rely on debt financing. To sum up, China's MBO funds may come from corporate asset-backed loans, management personal wealth, personal mortgage (pledge) loans, private lending, private financial lending, trust agency financing, and equity financing through the acquisition of platform companies.If the current law is strictly followed, the above-mentioned financing methods are not legal except for the use of personal wealth.According to the salary level of state-owned enterprise executives, it is impossible to buy corresponding equity.In order to obtain financing, executives must resort to extraordinary means, which provides a hotbed for crimes and encroachment on shareholders' interests. One method considered feasible by the industry is the joint trust institution as a financing platform.This method has few legal obstacles, but the complicated relationship and procedures make the MBO process easy to evolve into a farce of encroaching on shareholders' interests and conducting insider operations.There are not many successful examples of trust institutions in my country's MBO, but there are quite a few failed cases involving illegal activities.The well-known Jiangnan Mengzhuang Jinxin Trust is the representative of the ups and downs in the MBO of state-owned enterprises.Behind the curved MBO of Yili Stock and the MBO intention of Sichuan Changhong, there are shadows of Jinxin Trust. At the end of December 2005, the China Banking Regulatory Commission announced that Jinxin Trust was closed for rectification, and it was placed under the trusteeship of CCB Investment, and relevant personnel were inspected.The disgraceful ending of Jinxin Trust is also a blow to the reputation of the trust industry.The role of the trust industry in MBO financing is difficult to have a future. One of the simplest and most effective channels for MBO is to use equity for mortgage loans.But as mentioned earlier, this is prohibited by Chinese law, but this method is very popular in practice.The management usually pays a small part of the funds to the seller first, and after obtaining this part of the equity, applies for a mortgage loan from the bank, and uses the loan to further acquire the remaining shares.This can also be regarded as an invention of the Chinese.Relying on its actual controlling position in the company, the management used the assets of the listed company to obtain a loan and at the same time obtain equity with little effort.However, this kind of MBO is actually taking advantage of legal loopholes. The management has taken advantage of the loopholes in the legal regulations that have no further details on "equity investment and equity investment", and used the funds to purchase fixed assets instead of equity, and then Equity is acquired with assets as capital contribution.This approach is playing around with the law.However, in my opinion, the law has made it clear that bank loans should not be used for equity or equity investment. Even if this kind of borderline is clearly violated the original intention of the law, it is a violation of laws and regulations.It is a pity that the regulatory authorities and relevant government departments have adopted an attitude of inaction, ambiguity, and even encouragement in this link, so that this illegal behavior has become a model of enterprise reform. This approach is not yet the pinnacle.The following two methods can be regarded as the pinnacle of Chinese people's misinterpretation of MBO. Method 1: In order to complete the acquisition of state-owned shares at the lowest price, the management of the company deliberately set up an eye-opening trap.The management controls the external borrowing of the listed company and asks the major shareholder to provide equity mortgages. Afterwards, the listed company refuses to repay, the equity of the major shareholder is frozen by the judiciary, and its equity is publicly auctioned, and the management of the listed company calmly buys it at a price lower than the net assets , to complete the MBO.Our judiciary has actually become a link in the MBO chain being used, and it is being used legally.Some people say that this approach is extremely clever, but I think it is more appropriate to use "extremely shameless". Method 2: The management of the state-owned enterprise directly holds shares and becomes a shareholder without paying a penny, and then pays the purchase price in installments with future dividends. Sometimes, the local government will also provide financial support.This is something that really happened in China, and it is escorted by the red-headed documents of the local government.When I learned that MBO was in this field, I was surprised and had nothing to say.I have stayed in the United States for 10 years, and I have made some achievements in financial research, but this kind of acquisition is really unheard of!Isn't this an out-and-out act of stealing!In the most straightforward words, the essence of this kind of MBO method is - as long as you become the boss of a state-owned enterprise, this company can become yours.If you have no money, don't be afraid.You don't have to spend a penny yourself. On the contrary, the government will catch up with you and provide financial funds to ensure the successful acquisition for you!If you were a shareholder of this company, would you like to have such a manager? Do you dare to have such a manager!If you don't like it, why let the country be such a shareholder! 我们口口声声说学习美国，可是美国搞MBO和杠杆收购，都是首先千方百计通过发行债券、引入机构投资者寻求资金，用筹够了的资金再去收购，要是公司股东对补偿不满意，你就没有可能收购成功。在美国绝无可能用中国这样的方式完成MBO的。想象一下，你去微软或者GE做经理人，然后对比尔盖茨和股东们说，我要对公司准备MBO了，但是我不付钱，先把股权让给我，以后等公司分红，我拿红利慢慢还就是了。难道微软和GE的股东会高高兴兴地答应？如果美国公司股东不会答应，凭什么中国公司的股东就应该允许呢？ 此外，管理层融资之后，必然要想办法通过不当分红，或是利用公司的人格进行不法交易获取非法利益，以偿还欠款。在中国现行的公司治理水平下，董事会和股东无法有力监督或阻止此类行为。而且，一旦MBO完成，经理人完全掌握了公司，就更加没有人能够阻止他从事违法行为。 由此可见，中国现阶段不具备为MBO融资的客观条件。勉强追求MBO，只能制造问题、矛盾、违法违规行为。 定价是MBO中非常重要的环节，因为它直接决定了收购方出多少真金白银。美国MBO的定价相对是比较成熟的，可以由中介机构对公司资产进行客观公允的估价。对于上市公司进行要约收购（Tender offer，不需要取得目标公司董事会和管理层的同意），相对简单一些，目标公司的股价是公开的，管理层只要在二级市场上发出收购要约即可。一般来说，收购消息公告后，目标公司的股价会大幅上升，因此管理层要付出溢价。MBO大部分应该是取得了公司董事会的同意的，但管理层和权益投资公司仍然要付出很高的溢价购得股份（一般而言，要约收购的溢价比较低）。目标公司的股东因此会获得超常的收益，对他们是比较公平的。 美国MBO的定价方法当然不止这一种，其他的还包括自由现金流量贴现模型、比较价值模型、资本资产定价模型（CAPM）、套利定价模型（APT）等。美国MBO主要借助高杠杆融资，所以与此对应，定价方法的核心是根据对公司的业绩预测基、息税前利润、可以负担的利息支出等确定公司可以承担的最大负债，然后计算出在一定杠杆下公司管理层可以提出的最高报价。我们可以看出，公司以往的业绩和对前景的预测对定价的影响是根本性的。 美国的定价方法经过了多年的检验，相对是比较成熟的，而且美国对公司的监管力度之大也是众所周知的。但即便是在这样成熟的市场和严厉监管下，仍然不能避免有些公司管理层为了达到降低收购价格而操纵盈余的情况。 对比而言，中国的监管更弱于美国，且上市公司的股权存在流通和非流通两种，这为操纵留下了巨大的空间。我实在很难想象中国MBO是种什么样的情况。 中国公司MBO的定价总体是小于公司实际价值的。我们第一要明白的是，收购的标的是发行在外的部分流通股份或不流通的国有股或法人股，可是中国的老总们搞MBO是绝对不会去收购流通股的。Why?道理再简单不过了，流通股有市场价格，一般都远远高于企业的每股净资产值。而非流通股只要协议收购，价格都可以谈的，不管谈到什么价格，一定会比收购流通股便宜。中国大部分MBO的定价都是围绕净资产做文章的。即使定价稍微高于每股净资产，收购方也早已经得到了最便宜的价格。因为净资产只是反应公司资产状况，根本不能作为全面衡量公司价值的标尺。用净资产作为定价标准是MBO中的误区。 即使对非流通股的协议收购价格，中国现行法律规章也没有详细的规定。提及定价问题的是中国证监会发布的《上市公司收购管理办法》：“当收购者为被收购公司的高层管理人员或员工时，应当由被收购公司的独立董事聘请财务顾问，就被收购公司的财务状况进行分析，对收购要约的条件是否公平合理等适宜提出报告”。 这个规定的本意非常好，但是缺乏细节，过于粗糙，至少给不规范的MBO的定价提供了机会。监管部门显然是假设中国的财务顾问以及中介机构是勤勉尽职、公正公平的，甚至寄希望他们承担一部分监管责任。但这种善意并不能保证财务顾问、中介机构、公司管理层的诚信。这些机构之间很容易合谋。 在现实中，定价过低导致的国有资产流失极其严重。下表列出了1999-2002年实施MBO的上市公司的定价情况，其中丽珠集团因为出现竞争对手而未成功（我倒觉得这是一件好事情）。从表三可以看出，12家公司中有5家公司的定价低于每股净资产，而且差距还很大。美的MBO中的大股东两次转让价格分别是每股2.95元和3元，均低于转让发生的2000年的每股净资产4.07元，折价达到43%。特变电工定价甚至达到了低于每股净资产61%的程度。不过，其余7家的定价都接近甚至高于每股净资产。这给人们一种误解，国有资产没有流失，反而增值了。这就是我前面所讲的MBO的误区。我们暂且不谈MBO之前的净资产是否被人为压低了（我不认为中国的公司管理层比美国的公司还要诚实守信，而且关于资产被压低的证据其实很明显的），即便净资产价值是公允无误的，收购价格相对于这些公司的价值而言仍然是再便宜不过了。我们只要看一眼收购价格与收购前1个月流通股均价的对比就明白了。相对于净资产，股价是更为客观反映公司价值的指标，虽然理论上我们不能把非流通股价格完全等同流通股，但是至少是一个重要的参考指标。在所有的这些公司中，收购价格全部大幅度低于股价，最高的仅仅相当于股价的39%（宇通客车），最低的相当于股价的12%（特变电工）。国有资产的真实价值在收购中大大贬低了。这与美国的高额溢价收购形成了鲜明的对比。 除了上市公司，还有很多控制上市公司的大股东进行了MBO，这种MBO变相控制了上市公司，因此管理层获利更大。鄂尔多斯集团和张裕集团都属于这种类型。由于非上市公司信息并不公开，使得MBO定价的透明度比上市公司更低。 在MBO定价过程中，还存在一个信息不对称而导致价格偏离合理水平的问题。作为管理层，是最了解公司的实际价值的。在向政府和监管部门申报材料的过程中，虽然有中介机构参与，但一手的信息仍然由公司管理层提供。政府监管部门在信息获取方面居于劣势地位，这样MBO定价的结果自然有利于管理层。 在一些特定的背景下，我们可以清楚看到管理层为了取得低收购价格，会急不可耐到什么地步。2005年开始，中国开始进行股权分置改革。为了达到激励公司管理层的目的，2005年8月23日，证监会、国资委、财政部、人民银行、商务部等五部委曾联合发布《关于上市公司股权分置改革的指导意见》，其中明确指出：完成股权分置改革的上市公司优先安排再融资，可以实施管理层股权激励。2006年1月，证监会出台了《上市公司高管股权激励试行办法》，也明确规定，已完成股权分置改革的上市公司，可以按规定实施管理层股权激励。规定很清楚，如果管理层要实施股权激励，必须要在完成股权分置改革之前。可是，按捺不住的公司管理层，居然趁股改机会实行捆绑式的股权激励，把管理层自己作为股改的收益方。典型的公司有中化国际、中信证券等。 竞争是提高效率的重要途径。美国MBO过程中也充满了竞争。管理层收购并非一帆风顺，一旦有强有力的外部力量介入，公司管理层就未必能够如愿。例如，我们前面提到的KKR收购RJR Nabisco公司中，一开始就是公司的原CEO罗斯·约翰逊为代表的管理层要对公司实行MBO，而KKR是作为竞争对手出现的。最终，KKR战胜了管理层，作为权益投资者入主公司。约翰逊得到了一笔数额不菲的退休金，退出竞争。恰恰由于这种竞争，使美国MBO在定价、融资、保护投资者方面对收购者造成强大的制约力量，一定程度上保证了收购的公开和透明。 中国的情况就完全不同了。在已经发生的MBO中，只有丽珠集团由于出现了竞争者而未取得成功，其他大部分MBO都是没有任何竞争的情况下，由管理层主导完成。中国的MBO具有强烈的排他性，除了政府主管部门和公司管理层，其他外部力量几乎不能渗透到这个过程中。这种排他性一方面来源于行政壁垒，另一方面来源于管理层对拥有公司信息的绝对优势。由于缺乏竞争，MBO变成了管理层的独唱戏，相对公平公正公开的原则就难以保证了。 媒体对此用讽刺性的比方描述很多中国式的MBO：我要买下一个装着钱的钱包，而结账时我恰恰要用这个钱包里的钱来支付，因为我买下了我当然可以动。 这就是典型的中国式MBO逻辑。在没有竞争、没有任何制约机制的背景下，我们怎么可能达到公平公开公正的MBO呢？ ! “股东”这个词，在美国和中国的资本市场上的意义完全不同。在美国，股东是上帝，是公司一切运行活动的中心。管理层所做的，就是要为股东创造财富。在中国，股东是被圈钱者的代名词，是可以被忽略和蔑视的一个群体。这种差别，在MBO过程中体现得淋漓尽致。 即使在美国的MBO中，被收购公司的股东利益也是被摆在第一位的。经理层要实现MBO，必须要通过艰苦的谈判取得股东的认可。即便是管理层要收购公司的同时，只要你还是公司管理层，你就负有对股东的信托责任。任何损害股东利益的行为，都可能导致丢掉现在的位置，更不用说什么MBO了。 美国管理层对股东的这种信托责任是浸入骨髓的。下面的例子或许能让我们认识他们的思维。我们知道KKR由于参与一系列杠杆收购，名声并不是太好，用我们的话来说就是“资本大鳄”。但是2002年6月10日一家媒体记者采访KKR创立者George Roberts和Henry Kravis的一段对话却颇有深意。记者问他们：“你们从事这一行最让你们感到不好的是什么？” Henry Kravis这样回答：“如果我们没有能为投资者做到最好，那就是我们巨大的遗憾。我们非常非常努力地工作，希望为他们（投资者）赢得合理的、持续的资本收益率，并与他们保持良好的沟通……如果一项投资没有达到我们预期目标，我们感到十分难过。人们把钱交给我们，而我们觉得让他们失望了……我们会非常努力，争取让这些有问题的投资也能创造出价值，或者找到解决的途径。” 我无意为Henry Kravis贴金，也许他只是在讲冠面堂皇的客套话。但是他的话反映出美国管理层的一种理念，一种为股东尽职工作的理念。他们知道要讨好股东，要以股东的利益为终极目标。 而中国公司的管理层，何曾真正为投资者尤其是小股民着想过呢？在MBO过程中，有哪个老总时刻把国家和投资者放在心上？我觉得，我们的公司管理层甚至都从来没有想过自己是要为投资者负责的，管好企业是自己天然的责任。企业经营失败了，那不是我管理者的错，是体制不好；企业发展的好，那就是我老总的功劳了，最好拍电影宣传我的本事，当然也没忘记向国家和政府要MBO的优惠政策，理由是看人家美国管理层的薪酬水平比我们要高多少。可是，他们绝对不提人家管理者对股民付出的义务和责任。 所谓MBO的退出机制，是指权益投资机构（类似KKR）和债主在完成MBO之后，逐步从公司中退出其股权和回收债务。由于债务的偿还相对比较简单，只要公司出售部分资产或者利用利润按期偿还债券持有者即可，所以讨论退出机制多指权益投资者的退出。美国MBO后的退出渠道主要有以下几个： 1.公司发行上市。一旦公司上市，权益投资者可以在二级市场抛售所持股票，退出公司。如果MBO之前公司已经是上市了，MBO完了一般要退市，等再找寻机会重新上市。这是我想重点说明的——美国公司完成了MBO，一般接着的就是要退市。这可能出乎中国普通人的想象。因为我们印象里，只有公司经营失败了，被特别处理了，又没有人来重组，最后不得已才退市。可是，在美国要搞MBO，公司一般都要退市。因为MBO之后，公众公司就不再是公众的了，而是某几个私人的了，公司不再是合格的公众公司了。而且，退市也避免了管理层利用MBO进行股价操纵的可能，对投资者是一种保护措施。不过，在中国，搞MBO的老总们是绝对不喜欢退市的。因为公司退市了，他们如何再去股市上继续圈钱和操纵呢？正是依靠广大的流通股股东的输血才造就了公司的价值，MBO的经理们怎么能放弃让自己致富的机会呢！ 2.出售股份。权益融资者可以向希望购买公司股票的机构和个人直接协议出售所持股份，也可以向原先的管理层或者权益收购者出售股份，后者就变成了回购股票行为。 3.二次MBO。这是一种带有和原管理层竞争性的退出方式。一般是有新的管理层和融资机构购买原权益投资者原先的股票，从而取得公司控制权。这种方法很可能涉及取代原先的管理层。 4.bankruptcy.这是万不得已的办法，在公司经营极度困难的时候采取的，严格来说，称不上是一种退出方法。 中国现在权益投资者的退出渠道是比较狭小的，最大的可能就是转让给其他愿意受让公司股权的机构。没有完善的融资退出渠道，MBO就缺了出口，这也是中国目前还不适合MBO的原因之一。 MBO是否能对公司业绩产生实质性影响呢？这个问题十分重要，因为这几乎是MBO赖以存在的基础。拥护MBO的人非常在意这个结论，因为这是MBO在中国推行的主要依据和理由。 理论上，有众多假说支持MBO提升业绩的观点。经典的包括MBO降低了代理成本，明晰了产权，激励了管理层的工作热情，等等。但是，这些理论都有严格的假设，放置于中国的制度背景，未必完全适用。例如，JENSEN的代理成本理论，逻辑上是很完美的、很有说服力，对美国的实证研究也支持这种理论。我早期有很多的研究都是与他的这个理论相关的。他认为，债务能够减少企业中的自由现金流，致使经理人不能滥用资金，而且债务率高会对经理人产生一种压力，迫使他们更为勤勉的工作。因此，高负债会提升公司价值。这种理论移植到MBO中，则认为MBO之后公司债务率上升，所以经理人会努力工作，所以公司价值会得到提升。 然而这个理论到了亚洲和中国就完全不能成立了。我2001年写过一篇论文，就是研究债务在公司治理中的作用。我和我的两位合作者对比了债务在欧洲和亚洲公司治理中的作用，发现：在欧洲，债务能够抑制大股东的侵占行为，而在亚洲，债务反而会帮助侵占行为。中国的情况也很相似。我们做一个简单的分析就会发现，中国上市公司的负债率是与业绩呈反比例的。Why?因为债务根本不能约束经理人和大股东的行为。在缺乏强有力的监管的时候，债务不仅不能让这些经理人更加兢兢业业地工作，反而会增加他们做假账、违法犯罪的动机。 在实证研究方面，围绕并购是否能创造价值，国际上研究成果汗牛充栋，但并不像国内宣传的那样，结果都是支持MBO能够提升业绩。实际上，两种对立观点始终存在。 我们先看两个发生在美国的MBO案例。一是大名鼎鼎的KKR对劲霸电池（Duracell）的收购，这可以作为KKR最成功的收购。劲霸电池之前是食品加工巨头克拉福特的一个事业部，规模很小，与总公司业务并无关联。总公司打算将其出售给柯达和吉列。劲霸CEO鲍伯·坎德于是联系KKR对公司实施MBO（请注意：是公司首先要剥离劲霸，而非劲霸管理层主动要MBO，这与中国MBO情况大不相同）。 KKR于1988年5月击败其他竞争对手，以18亿美元的高价收购成功，其中3.5亿美元用于投资股本。劲霸管理层35位经理共投入630万美元购买股份（其中鲍伯·坎德投入100万美元），而且KKR给每一股分配5份股票期权。这让管理层拥有公司9.85%的股权。KKR给与管理层充分的信任，后来又提高了劲霸CEO的资本投资权限以及管理下级经理报酬。KKR和劲霸管理层辛勤的努力没有白费。一年后，劲霸的现金流增加50%，以后更以每年17%的速度增长。1989年5月，劲霸公开上市，第一个交易日价格从IPO时候的15美元升至20美元。劲霸业绩也随着上市快速增长，仅1990年第2季度，利润就达1940万美元，比1989年上升13%。上市后KKR控制了61%的股票。1996年9月，KKR把劲霸卖给了吉列公司（吉列共耗资78亿美元），当时劲霸营业额已经是收购时的两倍，税前利润超过了2倍多，在美国国内的市场份额已经从第2位上升至第1位。和吉列的交易结束时，KKR获利42亿美元，且仍拥有劲霸34%的股权。而此时当年的35名经理的持股价值已经翻了11倍。到2000年9月，KKR仍拥有价值15亿美元的5100万股吉列股票。 另一个案例则是美国雷夫科（REVCO）公司MBO后经营失败的例子。雷夫科是美国最大的药品连锁企业。1986年3月，雷夫科公司CEO西德尼·得沃金（Sidney Dworkin）及其管理层出价11.6亿美元收购雷夫科公司所有的药品连锁店，这在当时是药品行业第二大杠杆收购案例。收购之前，是美国药品销售非常兴盛的时期，1976年至1986年间平均每年增长11.696％。在收购过程中，得沃金受到了竞争者的强有力的挑战。得沃金与其聘请的投资银行索罗门兄弟和欧洲的投资集团——跨大陆金融服务公司安排的杠杆收购计划中，得沃金向所有股东出价每股36美元要约收购雷夫科公司，这个价格比过去4个月的平均交易价高出6美元。然而，哈夫特家族所属的达特集团（DART GROUP）对收购雷夫科也很有兴趣，并且报出了更高的价格，得沃金只好再次提高价格至每股38.5美元（总额12.5亿美元），最后得沃金获胜（我们从这里也可以看到竞争者在MBO中对公平定价的巨大作用）。但雷夫科公司也因此背上了13亿美元的债务。雷夫科公司缩减了其非药品业务用于偿债，但同时决定新开100家新连锁店。为了缓解财务压力，董事会做出了一个失败的决定，将雷夫科公司的销售商品种类从原来的药品扩充至包括电视机、家具和录像带。但这个策略致使顾客不认可，公司利润急速下降。得沃金于1987年3月被免去首席执行官职务，董事会作了各种努力挽回损失，但最终失败，在MBO后16个月，雷夫科公司因无法支付4600万美元的利息而成为美国首例申请破产的大宗MBO案。 从上面两个案例，我们看到，MBO并非是万灵药，即使在美国，MBO之后的公司，可能经营的好，但也可能经营的更差。MBO是否能够提高企业的经营业绩，即使在美国也是一个未能完全确定的问题。目前，还没有完全权威的结果说明美国的MBO一定会提高公司的业绩和效率。 那么，我们再看中国。美国MBO的作用不确定，中国的MBO难道就一定会提升公司效率和业绩吗？在考虑这个问题之前，首先我们要排除MBO前后公司的财务报表都是真的。中国公司在这方面的风险特别大，因为管理层很可能为了达到MBO目的篡改账目。例如在收购前压低公司资产和利润，收购后再加调整，自然看起来好象业绩也提高了。这种可能性很大的。中国MBO例子不多，不过，个案已经显示出问题的严重性。 公司MBO之后业绩和效率的提升，取决于公司管理层调整战略、配备人员、削减成本、加大公司内部重整、合理化投资行为等等一系列适当的改革措施，理论所讲的对管理层的激励也无非是指企业变成私人的之后，管理层/大股东会有动力在上述几方面作出突破。但中国的公司MBO目的只是为了取得控制权，并不必然带来公司管理上的转机。已经有研究发现，MBO后公司的组织人事、业务特征、投资行为变化不大，未出现大规模地重组、剥离、大幅削减经营成本等行为。如果以前业绩好，也只是维持了一个正常的发展势头，不见得是MBO的作用。对中国MBO进一步深入的实证研究会帮助我们加强认识。至少，现在宣扬的中国MBO提高了业绩和效率仍然只是停留在假想阶段，实践中并未提供支持性的证据。 我希望读者能够通过阅读这篇文章，对什么是真正的MBO有一个大体的理解。中国的MBO是在我国法制不健全和国退民进背景下产生的一个畸形儿，它和美国MBO只是名字相同、形式形似，他们根本没有共同的本质。对于中国的国企来说，MBO更可能是一条表面布满鲜花的陷阱。缺少了强有力的法制监管，MBO的每一个环节，都可能是剥削的好机会。