Research On The Value Evaluation Of Yashili From The Perspective Of Acquiring Firm

Valuation of target enterprise plays an important role on enterprise merger andacquisition, which has direct influence on the successful of the mergers. With thedevelopment of China’s economic and the adjustment of domestic industry structure, M&Acases appear more and more in our country. How to assess the value of the target enterprise ina reasonable and accurate way become a main issue the merger and acquisition enterprisefaces. As the reasonable price is based on the correct valuation, the study on valuation ishelpful to the mergers.The paper introduces the research results of domestic and foreign scholars in mergersand acquisitions and valuation. Then, the paper goes on introducing the characteristics ontarget enterprise’s valuation which is different from generals and the effect of synergiesarising from the acquisition. It can be improved that discounted cash flow model has itsadvantage after comparing four common methods of company valuation. Considering theactual situation of YSL, the paper finally choose free cash flow two-stage growth model asYSL’s valuation model, and the calculation of the value of synergies uses both a methodcombined sum of the internal and discounted free cash flow theory. This paper describes ideasand processes of discounted cash flow model in details for using it in practice better.After theoretical explain, we begin analyzing the external environment of YSL, whichinclude political environment, economic environment, social environment and technologicalenvironment. Besides, YSL’s strategies, resources, capabilities and core competencies areintroduced. All of these are preparing for the forecasting on the next stage. With historicaloperating data, we can make a prediction about YSL’s future growth, free cash flow, cost ofcapital and calculate its intrinsic value at the end. When taking synergies worth intoconsideration, intrinsic value isn’t the highest price MN would offer. After thinking synergiesover, the paper gets a new valuation of YSL from the view of the merger and acquisitionenterprise.As a continental company listed in Hong Kong，YSL has established a good brand andowned its sales channels. By the merger and acquisition, both business platforms will be effectively improved, especially for the MN, its shortcomings will be made up and that is veryhelpful to the development of MN. Besides, the case what is regarded as the largest mergersand acquisitions case happened in China’s dairy industry is just the beginning. Study on thevaluation of YSL can provide a reference for mergers and acquisitions side, and improve thesuccess rate of mergers and acquisitions.