Assessment On The Strategic Value Of M&A

Being an inevitable trend as globalization marches forward, M&A can enable the combined companies to achieve economies of scale and downsize operative risks; it also helps promote industrial restructuring and optimize resource allocation so as to enhance the overall competitiveness of the economy.Value assessment is the core of M&A. Currently, the traditional way of value assessment is flawed, often neglecting the strategic value of M&A. Although we can estimate the potential oppotunity value in M&A process by way of real option, the relation between this potential value and stratigic value is still unidentified. Therefore, the focus of this research is to assess the stratigic value of M&A.This thesis firstly views the stratigic resources, and gives a definition of the stratigic value of M&A. Then it is pointed out that the understanding of corporate stratigic resources is the basis for M&A. It is the pursuit of new strategic resources that urges a corporation to conduct M&A, planning to redeploy the resources of the target corporation for new strategic ones after the conclusion. The serial decision makings bring about a large amount of oppotunity value in M&A process, which is a reflection of M&A's stratigic value. Given the definition and the attribute of the stratigic value as an option, the method of real option is then introduced, and a two-stage assessment model system is established combining uni-period binary and multi-period ternary tree models. The application of this system is also initially discussed. The new system, easy to use and spread, can not only assess the stratigic value generated through M&A process, but also provide more exact and effective decision-making basis for practical M&As. In its conclusion, specific case is adopted to study the application of the model system, and concerns in real use are indicated.