A Study On Valuation Methods In M&A Of Corporations

Every coin has two sides, so is M&A. While a successful M&A deal will bring enormous profits to the enterprise, a failing M&A deal may drive the enterprise to the last ditch. The causes of M&A failure are complicated, the important one of which is that M&A initiators' analysis of the value of the object enterprises is not thorough and complete.This article, with reference to fundamental theory and experience of corporate valuation, gives an analysis on the four methods of corporate valuation, that is, discounted cash flows, market comparative method, assets valuation, furthermore, it discusses their respective adaptability and limitation, and how to select a proper method to evaluate a corporation practically. And in order to apply valuation theory, a case study would be done. In the end, this article explores the particularity of corporation evaluation assessment in M&A and especial instances in China in order to table proposals to ameliorate corporation evaluation assessment in our country.Based on the analysis, each valuation method reflects enterprise's value from some sides. The conclusion which each method obtains is useful information, especially in our country's situation where the securities business and the rule of law are not so mature. Generally speaking, the valuator needs to synthesize all kind of results and use his judge to draw a final conclusion more accurately, all the more, we have to transform the M&A system, the motivation of M&A, securities business and so on to improve the corporation value assessment in China.