A Study On The Valuation Of Target Enterprises In China's M & A

For the global economy development, Acquisition is an important economic operation. It is also used as an important tool in enterprise to improve the development, expand the size and strengthen market share. When the enterprise has the ability to use this tool, it can leading to a higher growth rate. However, the deal is complex, involving many different procedures, such as legal provisions, provisions of the acquisition. Each of them is very important, if used improperly, could make enterprises into an embarrassing predicament, not only can't achieve high-speed development, but also can bring trouble to the enterprise. Therefore ,the success rely on the leaders' understanding of the key factors of enterprise merger. We believe that the key factor in this transaction is price. It is also one of the areas that both academia and the business community concern on .In this paper, we do some superficial research on this issue.In enterprise Mergers and Acquisitions, the assessment value of the acquired company is defined as in acquisition activities, participant companies how to make a consensus views on a correct and reasonable valuation and based on this valuation they can make the final transaction price. In this paper, with the beginning of the assessment of the value of enterprises in M & A activity, we analyzed the present situation of enterprise value assessment and the advantages and disadvantages of each method . Combined with China's actual situation, we set up AHP to assess the value of M & A. We divide the valuation of the target enterprise into two step: the Enterprise Value before merger and the increased value after M & A. We use the increased discounted cash flow to calculate the new increased value of the participants M & A. Finally, we use this method to evaluate bayi steel company as a practical application.This paper is divided into five parts. The first part of the paper is introduction, we introduce the Background and Significance of the valuation of target enterprises in M&A and the present situation. The second part is M&A and the value of corporate assessment, we introduce the basic concepts of M&A and the value of corporate .In part 3, we analyze the methodology of target enterprise value assessment by comparison. In part 4 we try to find a method the merger should choose to assess the value of target enterprises under China's national conditions, we make AHP and incremental discounted cash flow method using in the assessment of the valuation. In the last part, we set bayi steel company as an example by which we assess the value of M & A using the method we proposed in the paper.