Options In Business Valuation

Business valuation is becoming the majority of business managers and investors, financial management, an important reference basis for investment decisions, while merger and reorganization among enterprises, equity transactions, provide an effective valuation tool.Real options theory of financial options in kind (non-financial) assets, the extension option, we can be the underlying asset the option is called non-financial assets, real option. As the underlying asset is not stock options, bonds, futures or currency and other financial assets, but a specific investment project, the project can understand the corresponding equipment, physical assets such as land, therefore, describing them as real options.At present, more developed capital markets in foreign countries, business valuation theory and methodology have been maturing, and in national assessments is not enough in-depth theoretical study to assess the methodology is not perfect, enterprise value assessment method for domestic use are mainly discounted cash flow France, the relative valuation method, options, pricing and so on, most of the methods in practice there are technical limitations and incomplete theoretical system, this paper believes that law is a great option objectivity, and its valuation of the Applications should be further strengthened, so he chose to call law on our part of the assessment of the value of listed companies.In this paper,12 based on data from the cement industry, the use of options method to calculate the value of its five-year assessment, and to do with the actual market value of contrast, found:First, the option method for the subjective appraisal of the parameters such as maturity, changes in risk-free rate of return is not sensitive to the subjectivity of this method shows little effect. Second, the market value of the option method is always around the assessment of the value obtained by fluctuations shows that the assessment method to get the value of options can be used as the intrinsic value of companies. Third, the option value of law is the assessment of the variance of smaller, indicating the value of options assessment method is more stable than the market value.