The Research On Valuation Problems In M&A Decision

Merger and acquisition (M&A), as the core of capital operation, has been emerging with various forms in China in recent years. It plays an important role in promoting current economy development and enterprise reform of our country. However, only a few cases were quit successful. Most of them couldn't reach the expectancies of decision-makers. The reason no doubt lies in a lot of respects, among which the lag of dicision is an important problem that can't be ignored. To achieve success in enterprise M&A, the primary step of a decision-maker is to make decision and analyze beforehand, and the core of the decision is to assess whether M&A can create value or not. Through the research on valuation problems in M&A decision, this paper aims to offer some new threads and references for decision-makers, and tries to provide scientific instruction for domestic M&A practice, thus increases the efficiency of M&A.Combined qualitative analysis with quantitative analysis, this paper not only uses some domestic and international scholars' research on M&A and valuation for references, but also illustrates with some practical cases. In the course of research, the author tries to establish a set of value analytical methods by using valuation technique, so that decision-makers may judge effectively whether M&A would create value, and further make correct M&A decision.The key tasks of this paper mainly include: (1) puting forward the emphases and difficulties of enterprise M&A decision, and holding that decision-makers should make decision according to the principle of value creation; (2) setting up estimation model of value creation in M&A, including Synergy Effect Model, M&A Transaction and Evaluation Model, M&A Net Income Model, etc.; (3) explaining the application of virous valuation method and discussing how to choose proper valuation method in M&A decision; (4) studying the valuation of synergy effect after calculating the independet value of both enterprises respectively before M&A and the combined enterprise after M&A by Discount Cash Flow method; (5) studying the valuation of the target enterprise's expectedvalue, in which general target enterprises are valuated with several kinds of valuation techniques while high-tech target enterprises are valuated by Option Pricing Model. (6) analysing the estimation method of M&A premium and the components of M&A expenses, and then proving the feasibility of M&A.The ultimate aim of M&A is to increase enterprise value. The application of evaluation technique into enterprise M&A decision reflects the value concept of modern enterprises, which plays an important role in strengthening the ability of decision, improving scientificity of decision, and avoiding decision risk.