Enterprise Valuation Study

With gradually globalization of economy and capital flow widely, firm cooperation, joint venture, merger enterprise restructure etc, all the activities are involved in business valuation. Enterprise finical objective has transferred from maximization of profit to maximization of enterprise value, business valuation has become core issue of the enterprise management. Business valuation also called corporation valuation, taking the enterprise as a whole, evaluates its value for exchanging in the future. It is abided by the principle of maximization of enterprise value, business strategy selection, and asset appraisal will develop toward it.During the development of business valuation in our country, there is a situation in that the appraisal theory is behind the appraisal practice. In the practice, the replacement cost method dominates in business valuation and then it is verified by the income method, it is much different from the foreign country's appraisal practice in which the market method and the discounted cash flow method are a major approaches in business valuation. In our current market condition that the capital market is less developed and the relating economic and technologic terms are not perfect, how to value a business enterprise objectively and fairly and be close to international appraisal theory gradually is a critical problem to be resolved. This thesis begins with enterprise, value, meaning of enterprise value and influential factors of enterprise value, explains all kinds of approaches and methods for business valuation, makes an effort to construct a bridge between international appraisal theory and our existing theory. This thesis consists of five chapters: The first chapter, the introduction, which is beginning with two demands from the enterprises inside and outside. It makes a general description of documents in and abroad on business valuation, at the same time, puts up the meaning and approach of enterprise valuation.The second chapter, the asset, value and enterprise. Asset and value are the more important conceptions of asset appraisal. Asset is the object of appraisal, and value is the purpose of appraisal. However, the enterprise can be looked as aspecial asset, which is a combination of series of profitable assets.The third chapter, enterprise value and its influential factors. Firstly, conception and classification of enterprise value is analyzed. Secondly, it throws a light on all kinds of visible and invisible factors which effect enterprise value, and these factors must be considered during appraising enterprise objectively. The fourth chapter, business valuation and its approaches and methods. This chapter is also the predominant part of this thesis. Firstly, basic concept and hypothesis of asset appraisal are introduced. Secondly, according to different viewpoints of appraisal, cost approach, market approach and income approach are discussed systematically. This thesis puts an emphasis on the various methods of income approach, at the same time, makes a comment on the application of approaches and methods. Thirdly, in the terms of option theory, it makes an exploration to the option method. Finally, it puts out suggestions on the choice of appraisal method of business valuation under current market conditions in China.The fifth chapter, the analysis on the case of business valuation. This chapter is the positive analysis part of this thesis, which puts an emphasis on the discounted net profit method and the discounted free cash flow method. This part makes an analysis on the appraisal steps, factors concerned, methods applied in business valuation.