Enterprise Group Subsidiary Valuation

The value of enterprises is an important concept that can't be avoided in the market economy. In essence, the missions of enterprises are to create value. In the process of enterprise grouping, many kinds of problems are produced because of having insufficient understanding of group's strategic management, blind investment activity, etc. Many enterprise groups can't manage or appraise their subsidiaries scientifically, which hamper seriously enterprise groups' development and competitiveness in our country. So, it's difficult for our enterprise groups to obtain maximum value. The subsidiaries are source of the value of the enterprise group. Then, how much value is contributed by subsidiaries in realization of the enterprise group's value maximized, and how can the parent company manage its subsidiaries scientifically as investor and strategic administrative center to realize the whole group's value appreciation? These realistic problems have to cause the thinking of subsidiary's value assessment.The most basic difference between subsidiary and independent enterprise reflects in the pursuit of value: what independent enterprises pursued is the maximization of it's own value, and all its business activities serve for this goal; but for subsidiaries of the enterprise group, all theirs operational and business activities should serve for the maximum of the whole group's instead of the maximization of one's own value. This text is exactly based on this to analyze some relevant problems in subsidiary's value assessment.This text have probed into the relevant problems of subsidiary's value assessment of enterprise group based on the general characteristic of the enterprise group and enterprise's value assessment theory, through comparing with general independent enterprises. The problems include valuation meaning, valuation characteristic, valuation subject, subsidiary's value element, influence factor, etc.. Then in view of above the text put forward two kinds approaches--- the law of economic profit and two level analytic approach---to the subsidiary's valuation.The law of economic profit pays close attention to the appreciation of investment, and it can reflect the performance of the subsidiary. To Parent Company of the group, the subsidiary's valuation drawn through the index of the economic profit can meet the need of the investor and administrator to a certain extent. However, economic profit can't reflect the value of strategy which should been concerned byparent company mostly, also be the source of subsidiary's "peculiar" value. So, two level analytic approach remedied* the defect of economic profit in this respect. It measures the value of subsidiary at the foundation of subsidiary's profit ability and strategic contribution to group. That can be an innovation. And when analyses the strategic value of subsidiary, the text creatively put forwards technology synergy which be fully detailed in next part. However, it still needs to study further about how to calculate the value of two levels especially "strategic" value.Obviously, we can't find out an omnipotent appraisal law or models because of the complexity of objective environment and subjective factor. In fact, the study purpose is exploring more practical theories or methods to subsidiary valuation through constant research and perfecting the existing theories or method, so it can be more accurate to enable the valuation as much as possible. This text is a preliminary exploration of subsidiary's value assessment, and offers one thinking way for relevant research of afterwards. At the same time I hope this thesis can draw the attention of academia and assessment circle to subsidiary's value assessment. I believe subsidiary's value assessment will get heavy development with the development of enterprise group.