Case Study On M&A Valuation Of XY Company

With the economic globalization and speed up the pace of domestic industrial structure adjustment, M&A as one of the important ways of social resource allocation, in the role of China’s capital market has been increasing, merger and acquisition activity has become increasingly active. Mergers and acquisitions in the choice of reasonable valuation of target enterprise and the determination of purchase price is very important, to strengthen the research of the valuation problem to improve the success rate of M&A.This paper first introduces the commonly used valuation model of enterprise, in the process of introduction to the traditional enterprise valuation theory under different conditions of modification and choice made emphatically expounded, and the traditional valuation method and real options method between the advantages and defects are compared. In mergers and acquisitions practice, traditional valuation method is widely used; especially the discount cash flow method is still one of the most commonly used valuation methods at present.With emphasis on the discounted cash flow technique, this paper studies the M&A target enterprise in the valuation of steps and the selection of valuation methods in different conditions. Based on the domestic home appliance industry production enterprise mergers and acquisitions between cases as the breakthrough point, studies the cash flow discount method in the practical application of M&A valuation, estimation of the target enterprise value is given.Discounted cash flow technique is based on the fully competitive market, comprehensive analysis of the enterprise future development prospects and further evaluates the future profit ability, to the enterprise future cash flow to make reasonable forecast, to better reflect the nature of the enterprise value. But the cash flow discount method also has some shortcomings, such as do not reflect the dynamic changes of the cash flow, make the evaluation results more performance for static conclusions; Change did not reflect the enterprise financial leverage effect on cash flow and discount rate. In addition, the model of cash flow forecasts on the basis of the sales revenue and profit before interest and tax, when companies earnings management or reasonable tax avoidance, will appear the phenomenon of revenues, profits and cash flow mismatch. Therefore, when using the discount cash flow model, try to use cash receipts and cash cost as a data base, at the same time, we must give full consideration to the financial risk change influence on the enterprise value evaluation, ensure forecast data close to the actual enterprise management.Mergers and acquisitions of enterprise valuation is the combination of scientific and artistic value experience and judgment as well as to the accurate grasp of the development of the market will influence the choice of valuation method and valuation results. Based on thorough analysis on the basis of industry status and industry development in home appliance manufacturing enterprise mergers and acquisitions, for example, using the discount cash flow method to set up a business valuation models, acquisition valuation of home appliance industry has strong practicability and positive significance.