Title: Contractual buyout - a legitimate growth model in the enterprise development: foundations and implications
Authors: K.S. Reddy; En Xie; Yuanyuan Huang
Addresses: School of Management, Xi'an Jiaotong University, 28 West Xianning Road, Xi'an, Shaanxi 710049, China ' School of Management, Xi'an Jiaotong University, 28 West Xianning Road, Xi'an, Shaanxi 710049, China ' School of Management, Xi'an Jiaotong University, 28 West Xianning Road, Xi'an, Shaanxi 710049, China
Abstract: The paper develops a new strategy framework in the enterprise development, especially associated with loss-making firms. A legitimate growth model, contractual buyout is a 'collective ownership and joint administrative policy' in the market for corporate control and also provides an option to buy target firm in a given contract between acquirer, target firm and financier. It posits alike to socio-culture trend 'dating before marriage'. The strategy is further described as takeover defensive method, tax benefit scheme, foreign market entry mode and post-merger integration approach. The model is precisely discussed in various taxonomies, such as motivations, foundations, illustrations, guidelines and implications. It eventually recommends capitalists and multinational enterprises to choose CoBO as a potential entry mode to avail creative business openings in the world economy.
Keywords: collective ownership; contractual buyout; enterprise development; inorganic strategy; joint ventures; leveraged buyout; corporate control; mergers and acquisitions; M&A; strategic alliances; takeovers; turnaround strategy; growth models; loss making firms; joint administrative policy; defensive takeover; tax benefits; foreign market entry mode; post-merger integration.
International Journal of Management and Enterprise Development, 2016 Vol.15 No.1, pp.1 - 23
Received: 20 Jan 2015
Accepted: 13 Dec 2015
Published online: 10 Apr 2016 *