Analysis of Domestic Acquisitions and Cross-Border Leveraged Buyouts of Companies

Abstract

With the development of economy, Chinese companies have started to use M&A to expand their business, and more and more core acquisition funds are investing in LBOs. Meanwhile, the pace of China's economic opening to the outside world is gradually accelerating, and many companies are making cross-border M&A to enter the international market, and leveraged buyout, as a special form of M&A for multinational companies, has also attracted attention and spread widely. This paper first analyzes the basic principles, processes, and characteristics of leveraged buyouts. Based on the current situation in China and combined with specific cases, it points out the necessity and problems of applying leveraged buyouts in China. By analyzing and studying two domestic acquisition cases and two overseas acquisition cases, the paper draws some conclusions. Leveraged buyouts are to some extent applicable to M&A activities of Chinese companies. Despite the challenges they pose, leveraged buyouts will remain an important form of M&A for Chinese firms as long as China continues to improve its legal and financial environment and standardize its operational processes. Through an analysis of China's domestic economic situation and current policies on theories related to cross-border investment in overseas M&A, the advantages and risks of cross-border leveraged buyouts are explored and countermeasures for firms to learn from are proposed.