Assessment Methods Based On Real Option Value Of Mergers And Acquisitions

Against the discounted cash flow method and other traditional methods of investment valuation under uncertainty environment deficiencies, many scholars carry out the study of investment valuation under the uncertainty. Option valuation method is the representativeness of the study results. As everyone knows, a prerequisite for successful mergers and acquisitions are on a reasonable valuation of mergers and acquisitions business, which makes use of option valuation study for the enterprise has the necessity of its objective. In this paper, we re-examine traditional valuation principle by analyzing the company's M & A Real Option and calculation of the current mergers and acquisitions, by comparing the traditional method of valuation and real option valuation methods, mergers and acquisitions made in the application of real options framework.In this article, we firstly review option theory, real options theory and the theory of M & A, followed by mergers and acquisitions in contrast to commonly used valuation methods. At the option valuation method and discounted cash flow method on the basis of comparison, extraction methods and real options in corporate mergers and acquisitions in the application of value assessment framework, and accordingly high-tech mergers and acquisitions of start-up cases for analysis. Through M & A cases, used in practice to explain how the option valuation method to assess the value of target companies, as well as corporate mergers and acquisitions M & A because the act has to give up the option value of mergers and acquisitions decision-making provides a new perspective - that is, in the uncertain environment under the M & A investment managers have to make the adjustment and correction of future decision-making flexibility.Based on the above discussion, this paper argues that real options pricing technology in mergers and acquisitions in the main contribution has two aspects: First, it helps the management in accordance with embedded options and the underlying asset value of the uncertainty structure of different M & A program. Second, real options valuation method than the traditional method can better assess the value of flexibility. This is not to say real options method can completely replace the conventional assessment methods. Despite the adoption of this article research, M & A Real Options Application Framework gradually clear, it must be recognized because of the financial assets and physical assets Price Change insufficient understanding of the laws, constraints in practice the standard option pricing model used in real option pricing, M & A Real Options Application Frameworkthere are still many limitations, such as mergers and acquisitions business in the presence of competitors, how the valuation of target companies. In this regard, the proposed real options theory and game theory in conjunction with the presentation to the direction of further research.