An Application Research On Real Options In M&A

With the rapid development of economy and the global information, the company M & A strategy on the company's growth, maturity, stability and the process of globalization is the most important business strategy.Through M and A can be achieved by economies of scale and reduce operational risks. At the same time, it can promote industrial restructuring, optimize resource allocation, improve the competitiveness. And assess the value of the target company be considered the core of M & A transactions, determine a reasonable purchase price related to the success or failure of mergers and acquisitions. Therefore, the target company in M & A valuation theory and practice of research is to adapt to the economic development of the requirements of the objective situation.Traditional valuation methods of the company ignored the company's mergers and acquisitions in the option value and thus underestimate the value of the company. In this paper, analysis of the company's M & A options characteristics, and set up the company's M & A Real Option Valuation Model. Use of real options thinking to identify the characteristics of M & A options, and set up a real option valuation model. In an analysis of discounted cash flow method, this paper how the target company's value assessment of the application of real options valuation model. Through organic combination of discounted cash flow method and real options evaluation model, set up the target company valuation model. Thesis research results show that real options can be applied to domestic enterprises mergers and acquisitions activities, specifically manifested in two aspects: First, the target company shares for the ST value assessment; Secondly, through mergers and acquisitions obtained to assess the value of investment opportunities. It was further put forward a thesis of real options in mergers and acquisitions have value in limiting conditions for the acquisition of a correct understanding of both mergers and acquisitions process inherent in the value of real options provides a meaningful reference.