Mergers And Acquisitions, And The Target Enterprise Value Analysis

M&A (Merge & Acquisition) is the necessary result of the development of market economy. It is a kind of economic activity that two enterprises transfer property rights. Through enormous M&A during the past one hundred years, western countries have realized the industrial promotion and reasonable allocation of resources and increased the marketable competitive ability. So it is necessary to do some research on the subject.Studying the motivation of M&A is the first step to acquaint M&A. The dissertation generalizes the main western theories of M&A motivation and analyzes the causes affected the M&A motivation in China. Comparing the different motivation between western countries and China, we can find that the advocation of Chinese government is a main factor that causes the M&A in China. Consequently, many problems evolve. For instance, the government improperly intervenes with the M&A. To prove the situation, some empirical research on the M&A performance of issuing corporations (1997-1998) is made.Moreover, this article also looks back over the history of M&A in the USA and generalizes some traits that can give us some enlightenment, such as the function of the government and legislation in the M&A.After the analyses above, the dissertation provides such propositions as strengthening legislation and issuing stock to represent the capital of state-owned enterprise.Finally, the article introduces the Free Cash Flow model which is applicable broadly in western developed countries and talks about how to apply it in China to certain the value of objective enterprise.