Study On The Objective Enterprise Valuation In M&A Activity In China

Merger and Acquisition (M&A) is the inevitably trend of global development, by which, enterprises can get scale effect and reduce operating risks. Meanwhile, it can also promote adjustment of the industrial structure, optimize the arrangement of resources, enhance the competitive power of conomics as a whole. M&A is becoming more and more important in the economic development.M&A is a very complex systematic project. The procedure involves mixed conditions, demands, and strategies as well. The payment price is a high-concerned item for each side of the M&A. The price of the target enterprise in M&A is decided by many complex factors. The enterprise evaluation presents a persuasive proof for the final settlement price in the M&A. Therefore, we can say that the evaluation is a necessary step. Only when we select a proper method of enterprise evaluation can we make M&A activity effective and get a reasonable result. The theories and methods of enterprise evaluation is developing better and better in the long-term process of research and practice activities. With the establishment of market economy system, and the coming of knowledge-driven economic era, enterprises are facing fiercer competitions and larger risks. The uncertain developmental chance for enterprises is increasing, too. So, the developmental chances are also constitute a part of enterprise value. The opportunity value is becoming more and more obvious in M&A. Uncertainties decided that the enterprise evaluation is highly depended on the evaluation of the future investing opportunities. M&A practice demand the method of enterprise evaluation developing with it meanwhile, so, it becomes a brand-new project in enterprise evaluation to evaluate the uncertain opportunity value reasonably.This thesis carefully described the traditional three enterprise evaluation method based on overview of the native and international theories and methods of enterprise evaluation. Esp. analyzed the advantages and disadvantages of the three methods, introduced the applications of real options method in the M&A, divided the target enterprise value to present assets value and opportunity value, separately use cash-flow discount method and Option Pricing Method in enterprise evaluation to get reasonable enterprise value of target enterprise with case analysis based on the present economic environment. At the end of this thesis I had gave some suggestions on M&A based on analyzing the problems in the present enterprise evaluation in M&A of China.