Study On The Case Of Taihao Technology Corporation’s Acquisition Of Shandong Jimeile Corporation

Company merger and acquisition that is one of economic activities play a more and more important role in China. As market economy goes further, company merger and acquisition become much more popular. Moreover company merger and acquisition are regarded as a necessary choice for Chinese companies to take part in international competition for it gathers capital, strengthens corporation scale and enters into new area. In the merger and acquisition activities it is the key to evaluate target companies correctly. Now there are there methods to evaluate target companies, i.e. revenue method, market method and cost method. However all of the methods above have previous flaws.Residual income valuation method (RIM) that combines company equity value and account variables closely is the hot research topic in finance in America. However EBO also obeys the assumption of continuous corporation operation which is the flaw in income method. Allow for this, the author improves RIM through the correct logical deducing and introducing PB ratio as the key index to predict long revenue. This method above overcomes the defects of revenue method and the faults that EBO deals with the long revenue capitalization. Second, by improving the EBO index it. Through the assessment of improvements to make residual income forecast and forecast each company to reflect the profitability of the sales margin, reflecting the company’s equity multiplier and reflects the solvency asset management company linked to the ability of asset turnover. The improved EBO integrates the adventures of income method, market method and cost method and overcome the flaws of income method that deals with prediction of long income capitalization, valuation error generated by market method and the ignorance of future revenue generated by cost method. Finally, we would particularly like to point out that the improved model of their own deficiencies still exist, in fact, more business valuation is a practical art.In the paper it is proved that EBO is the best method for evaluate company by studying Taihao the acquisition between technology corporation and Shandong Jimeile corporation. This paper studies on the improved EBO functioned in companies merger and acquisition by combining qualitative analysis and empirical study, theoretical analysis and cast study. Finally the author pays attention on Synergistic effect, synergistic effect valuation method in acquisition of Taihao technology corporation and the distribution of Synergistic effect.In the end of the paper, we indicate that any type of valuation method will have its own shortcomings, in particular, mergers and acquisitions to determine the price not only by the assessment methods, techniques and conditions, but also by the merger negotiations skills, M&A motives, both sides of the market position and other factors directly affect. Actually, M&A valuation is a complex science and is a superb art.