Research On Development Problems And Countermeasures Of Rural Financial Institutions In Longhui County

Mergers and acquisitions(M&A) is an important way to enhance enterprises’s competitiveness and achieve their own development in today’s society with an increasingly competitive market. As a long-term strategic business investment, the decision-making progress of M&A has great uncertainty and irreversibility which always ignored by the traditional M&A and made their decisions imperfection. Real options focus on managing the uncertainty in the progress of investment decisions, and also try to introduce itself into M&A, thus may help decision makers analysis the problems in a comprehensive and correct way, and make the best decision finally.The type and features of Agriculture enterprise has been introduced at the beginning, then The traditional M&A decision theory has been summarized. The concept, form, motivation and methods of traditional M&A’s valuation such as discounted cash flow method, timing of valuation method, considerable valuation method and so on of M&A has been introduced in detail. This paper also compared the various methods horizontal and pointed out each method’s advantages and disadvantages. All the works above lay a basis for the necessary of introducing real options into M&A in reality. Then the concept and the classification of options and real options, the feature and the effect of real option were described in detail which laid a basis for the necessary of introducing real options into M&A in theory. Then the features of real options in M&A were analyzed and we found it is feasible to introduce the real options into M&A. Then the usage of real options about valuation, risk management and strategic management in M&A were introduced. The real options approach were used in a Agriculture enterprise of M&A case at last.Due to the flexibility of M&A, the volatility of the under lying asset value and the asymmetry between risks and benefits of M&A, the process of M&A contains a variety of real options, and the traditional method of M&A investment decision implies a series of idealized assumptions that the investment environment is determined, the investment cost is reversible, the investment rate of return is predictable, and thus companies can adopt rigid decision criteria, ignoring the complexity of the business investment environment, the uncertainty of technology and market, and the irreversibility of investment, traditional decision theory if M&A can not be a good guide in M&A.And in the investment decisions of M&A based on real options, the finance option were applied to project investment practices, the uncertainty of investment and the irreversibility of the investment costs were fully considered by the decision-making decision-makers to using delay strategy to maximize enterprise value. The studies in this paper update the traditional concept of investment decisions in a certain extent, provide a theoretical basis and new ideas for the corporate strategic investors and senior management.