The Research On The Pricing Of Reverse Merger

With the development of China’s economy, the number of mergers and acquisitions has rapidly grown, the field of M&A has been widely ranged, and the patterns of M&A have been greatly varied. As a kind of merger, reverse merger firstly appeared in western countries and it has appeared more frequently in recent years in our country. However, due to the complexity of the reverse merger at all aspects, relevant issues of RM pricing have neither fixed uniform nor comparable model. What’s worse, because of the complexity of shell company’s value constitution, reverse merger has been unable to control and directly harassed the operation of market rules, such as, the objectivity and impartiality of value assessment, the compliance of private placement and the fairness of asset pricing. Therefore, this thesis divided the pricing issues into three parts from the perspective of backdoor party through normative research and case research. What’s more, through comparative analysis between the value of shell company and the evaluation of price in reverse merger, it could testify the correctness of the value stratification and the rationality of bargain value, plus, it put forward the applicability of the way of pricing as evaluation stratification. All these works are very urgent and necessary.In this thesis, from the perspective of the backdoor party, the sources of value in price of a reverse merger can be detailed into three levels:the net income of shell company’s cleaning transaction in a reverse merger; the net income of backdoor party’s assets injection in a reverse merger; the price of shell resource. The first two levels correspond to the assessment value of shell company’s asset, the last level corresponds to the generalized shell resource premium. What’s more, it is this two parts that constitute the value of shell company which is the value basis of bargain pricing. All in all, the assessment value is comparable to the bargain value.This thesis is divided into five parts: I. Introduction. Firstly, it introduced the background and studying significance. Secondly, it introduced the research ideas and research methods, which were normative research and case studies combining qualitative and quantitative analysis. Finally, it came to the contribution and deficiency of this thesis.II. the Relevant literature reviews of reverse merger. Relevant concepts of a reverse merger and pricing were reviewed and concluded separately.III. Theoretical analyses of the reverse merger pricing. It divided into five parts:(1) the value analysis of the shell company in a reverse merger (2)the evaluation of shell company’s cleaning transaction in a reverse merger (3) the evaluation of assets injection in a reverse merger (4) the evaluation of shell resource in a reverse merger (5)comparative analyses between the evaluated price and the bargain price.IV. Case study. Firstly, considering the actual situation of the two negotiator in the transaction, there was the analysis of causes and the introduction of the reverse-merger background, combing its process. Secondly, to determine the evaluated price of the reverse merger:①the analysis of valuation of B company’s clearness trading②the evaluation of A company capital’s injection transaction③the evaluation of shell resource. Finally, comparative analyses of evaluated price and bargain price have been given, providing data basis to the fifth chapter.V. Conclusions and recommendations. Combined with theoretical analysis and case analysis, the pricing research significance of a reverse-merger was summarized, and relevant recommendations were given at the end.