Real Options Valuation In Mergers And Acquisitions

As traditional investment evaluation methods have many shortages under uncertainty, many scholars have launched the research on investment evaluation under uncertainty. Real options theory is the representative result of the research. It is known that there are many uncertainties in M&A(mergers and acquisitions). And the correct of the value of target enterprises is the key to implement successful M&A. But it is not perfect to adopt the traditional methods to evaluate the value of managerial flexibility and strategy, which is cause by uncertainty in M&A. Real option method, which can help investors to make the decision under uncertainty, has been applied to the research in M&A decision-making abroad and has become an issue of the foreland in M&A decision-making theory study. On the base of the previous research, combined the characters of M&A and the shortages of the traditional evaluation methods in M&A, the thesis studies how to evaluate the value assessment of M&A based on real options deeply.This paper adopts many methods that combines quantitative analysis with the detail explanation, the discussion of theory and illustration of cases, to study the application of real options in value assessment of M&A. There are six parts in this paper.Chapter One is preface. It includes the purpose of title, domestic and international research, the contents and the logic relationship among these parts, research methods.Chapter Two is real options theory summary. It includes real options concept, the three aspects of real options' application, contrast real options with financial options.Chapter Three is the necessity of apply real options to evaluate the value assessment in M&A. Induct real options into value assessment in M&A after introduction the keystone of the traditional evaluation method and appraisal its shortages. Analyzed the characteristic of option in M&A. And Redivide to the value assessment in M&A in terms of real options.Chapter Four is the application of real options in value assessment of M&A. Introduce real options' influence factor and calculation model .Put out the step of application of real options in value assessment of M&A.Chapter Five is case analysis. Through the case analysis we can confirm the rationality of the application of real options in value assessment of M&A .In this part we evaluate complex chooser options by binomial pricing model and carry sensitivity analysis on it.Chapter Six is Summary and forecast Includes research outcome of this thesis and points out the further research directions.