Research On The Application Of Market Approach Valuation Of The Target Enterprise In The Mergers And Acquisitions

Enterprise mergers and acquisitions is one of the most effective ways to achieve the transformation of economic development mode and adjust the industrial structure, which can improve the competitiveness of Chinese enterprises, so as to better fight for initiative in the international competition and cooperation. China’ s M&A market show explosive growth in 2014,and both the number of transactions and the amount involved break the historical record.In the process of mergers and acquisitions, valuation and pricing of the target company is one of the key issues for the success of the transaction. Due to the late start of our country’s asset appraisal industry, cost method is the most frequently used on the market, followed by the income approach in the practice process. With the transformation of industry involved and the ways of mergers and acquisitions, valuation and pricing of M&A face new challenges.Market approach which systematically covers securities market parameters, considering the business size, capital structure and the external environment factors, providing effective information for the M&A market value of the transaction subject, is the most direct reflects of the valuation method of the market property. The article first introduces the advantages and disadvantages of the asset based approach, income method, market approach and how to choose the comparable objects and the value ratio of the market method. Then, through the specific operation of two cases using market approach explain how to select and determine the data in the practice process. The innovation of this article is that comprehensively analyzes the case in different value ratio, and compares with the assessment report results. Meanwhile, based on the different value ratio summarize it’s premise and foundation in the using process. Finally, with the theory and practice analysis as the foundation, summarizing the existing problems of market method used in our country and put forward corresponding policies and suggestions.