M & A Activity In The Target Company Valuation Studies

What the text was chosen is a side of a the enterprises M&A-the estimated method of the object enterprise in M&A. Western scholar has discussed the enterprise discounted cash flow model that takes the income as the foundation. This kind of value estimate method has become one kind of trunk stream method in M&A practice. But owing to the particular market environment of our country, theory circle has given many kinds of guidance of estimate method to guide the M&A practice. When the objective enterprise having gone bankrupt or is close to the bankruptcy we often using clearing the value estimate objective enterprise value; Substantial value is the method which compared the object enterprise value with the cost to purchase the same assets, and then you can make the decision; the market comparative method is advocated that the corporation of affinity should sell with the price of affinity; the enterprise discounted cash flow models also be used when we M&A the object enterprise which still got incomes.In abstract, the enterprise of the rational faculty was regarded to be a sponsor of M&A, and the objective enterprise should create value for shareholder. But taking a sweeping view of the research of the United States. In the past 30 years, particularly research of the 70's - 80's ,you can find the result is many more complicated than anticipates:(l)As a whole(that is to say ,put the purchase's CAR and the object's CAR together),M&A can create value .(2)Shareholder of object enterprise got much more Cumulative Abnormal Returns.(3)M&A is an enterprise activity that the risk is very high , and approximately has half of M&A to be defeated. Since the Reform and Opening, More than 20000 enterprise has been merged in our country, but few of them got succeess. Maybe the "M&A difficult problem " can explain it (Sheng Hong , 1998).In this text, we should compare the different estimate method each other, and then to choose the method according to the cause of the M&A and information gains. Both side of the M&A, especially the purchase enterprise should estimate the object enterprise carefully before the negotiation. The purchaser should fix the ceiling price, avoiding the overflow payment.