The M&A Valuation And Risk Management

The dissertation points out that the core of M&A management is the M&A valuation and risk management. The study aims to provide one advanced analytical and applied framework of M&A valuation and risk management for the buyer. Main contents and results of this dissertation are described as following:1. We provide a clear definition of M&A and classify M&A by different standard. We present an analysis of every basic motive of M&A. Finally, we expound and prove the importance and necessity of M&A management during M&A process, briefly summarize the main contents of M&A management, expound and prove that M&A valuation and risk management are the cores of M&A management.2. We first give a strict definition of M&A valuation. It is defined as this: M&A valuation is a process to judge and measure the value that consists of the underlying asset itself and its derivatives produced in the M&A, which bases on risk adjusted. Meanwhile we point out there usually exist three big misunderstandings of M&A valuation among the people. Secondly, this dissertation analyzes several functions of M&A. Lastly, we introduce several common modes for M&A valuation and its latest developments.3. We have completely designed the system of M&A valuation, which is made up of discernment, measurement of M&A value, balance between M&A value and risk. This dissertation carefully analyzes the range of contents of the discernment and outlines the approaches and steps for it. We have found that the content of the discernment should contain assets type, synergy effect type, real options type source of value and their properties and status. For the measurement, we have regarded M&A value as the total of the above three types of source of value. There are many functions of the balance between M&A value and risk. Then we provide the solutions for balancing them.4. Firstly, we define the M&A risk and analyze its properties and characteristics. We have found M&A risk to be synthetic, contributory, dynamic and capable of being controlled. Secondly, we define M&A risk management as the process to discern, measure and deal with M&A risk. M&A risk management has three characteristics i.e. flexible, elastic, changeable, and has four basic functions. Lastly, we introduce the main experiences of M&A risk management and its latest developments.5. System of M&A risk management is made of four parts i.e. discernment, measurement, choice of strategies for dealing with M&A risk and implementing, evaluating, regulating the strategies. We have clearly defined the discernment of M&A risk, put forward its several basic requirements, and provided the approaches and steps for it. We have listed three sorts of methods of the measurement of M&A risk, and proposed a new M&A measurement based on VaR, which is another key point and innovation in this research. We have intensively discussed the conditions or situations for applying the strategies of dodging, diverting, keeping or keeping a lookout and controlling to deal with M&A risk. Finally, we have described how to implement, evaluate and regulate the strategies to deal with M&A risk.