Improvement Research Of The Enterprise Valuation Of DMG Entertainment And Media Co.,Ltd Basing On Market Approach

A lot of practice both from domestic and abroad proved that, Mergers and acquisitions is not only an important way of enterprises to be bigger, stronger and more excellent, but also the necessary means to adjust economic structure, transform the mode of development, promote industrial upgrading. To this end, our Government attaches great importance to the mergers and acquisitions work of enterprise. Since 2010, the State Council issued a document several times to encourage market-based mergers and acquisitions. And give full play to the role as main channel of capital markets, so their ownership and control of the company can have a smooth transfer between different areas and different ownerships. However, valuation pricing as an important part of the market-based mergers and acquisitions is also highly valued. And the key of the valuation is the method used in assess for target enterprise.Industries such as film and television animation, network technology, integrated marketing and other media companies which are in the rapid development, also greatly promote the industry’s mergers and acquisitions. How to reasonably value this kind of income flow instability of light asset, has been the focus and difficulty of all walks of life. On the basis of reading a lot of literature, the author proposes that the market approach is the best way to evaluate this kind of light assets. However, it is easy to be mistaken for the value of the underlying assets. Therefor, appraisers are supposed to compare it basing on the average valuation multiples of the industry and then make a judgement via the own development of the target enterprise. If it is overvalued, the appraiser ought to rethink futher the inappropriate parts and then make a timely correction in order that the valuation can be back to normal.First, the author tidies up the appraisal thinking of the market, the characteristics and the applied appraisal approaches of media enterprises. Then, the author takes DMG Entertainment and Media Co.,Ltd as an example, confirming that it is truly overvalued by comparing its valuation multiples in the recent years with the industry average plus its own development. At last, the author finds two inappropriate points via research the case carefully and then fixes it. Thus, the appraised valuation returns to a reasonable level.