The Research Of Value Assessment Of Enterprise M&A Based On Real Options

M&A is inevitable trend of development of economic globalization, by which enterprise can acquire large-scale production and reduce the business risk. Meanwhile, it can also promote adjustment of the industrial structure, optimize resource distribution of the society, and improve competitive power of the whole economic.The key process of M&A is value assessment of the target enterprise. There are a lot of methods to evaluate enterprise's value at present, such as assets value method, discounted cash flow method, and so on. Because investors pay attention to not only the past achievement of target enterprise, but also future development chance, thus it is important to put future development value into value assessment of enterprise. The theory of real option affirms that adaptability and flexibility of the assets and resource have strategic value, so that it can offer a new way of value assessment for M&A.This thesis put emphasis upon analyzing real option characteristic of M&A and establishing value assessment model based on pricing of real option.M&A has some characteristics of the real option: The flexibility of M&A decision. Under the uncertain market environment, the enterprise can make the flexible and alternative decisions in investment, selling and resource distribution; Secondly, the price of the assets of the target enterprises is fluctuant. Because of uncertainty of the merging environment, profits of future investment are uncertain, so the assets price is also fluctuant; Moreover, risk and income are of dissymmetry, which is coincident with characteristic of the option. Finally, the flexible options exist in the course of merger and acquisition, and these real options do have value.Because M&A has these characteristics of the real option, we can use the theory of option pricing to assess value of the target enterprise, and establish value assessment model based on pricing of real option. The value of target enterprises include the following contents : the value of real assets of target enterprises, which can be calculate by predicting future cash flow and discounting by the average capital rate; Another part of enterprise's value is the discounted value of future improving chance, namely the option value of target enterprises; The M&A course itself is an option too, so that this option value should be considered into the general value; In addition, merge premium from cooperative effects should also be considered.