Valuation Of The Target Company In The M&A Based On EVA Valuation Model

As the world economy continues to develop,more and more enterprises optimize the allocation of resources in the development process,build the core competitiveness,or to achieve industrial diversification through merger and acquisition(M&A).Five M&A waves worldwide emerged batch after batch of successful cases,the success of mergers and acquisitions is inseparable with accurate and reasonable price,so the valuation of the target company has become the focus in M&A.To accurately target company a reasonable valuation,we need a comprehensive and effective M&A pricing method and model.Star from the background and significance of M&A,through the introduction of the current domestic and international M&A Research Situation pricing method,the existing main M&A pricing method,the basic content of the model,points out the traditional,mainstream M&A pricing method Because based on accounting profits rather than economic profit valuation system brought about can not fully assess the enterprise value limitations.For most strategic mergers and acquisitions,the profit potential economic value after the merger and of synergies and other associated enterprises also must be fully measured and assessed M&A pricing process.On this basis,this paper introduces the Economic Value Added(EVA)and the concept of EVA valuation model-based and do further exploration and research,the introduction of merger synergies in the proposed merger application of EVA valuation model improvements.This paper uses qualitative and quantitative analysis method,from the angle formed from the merger of the target value of the company,combined with M&A Motivation changes in the value of mergers and acquisitions,and gradually establish EVA acquisitions in target companies valuation model,At the same time introduced the concept of synergy,the traditional EVA valuation model is further enhanced with EVA value of M&A a synergies generated.In this paper,the actual cases of YinHe Electronics merger with Tongzhi Electromechanical,reference with Tongzhi Electromechanical audit report October 31,2013,and the same Tongzhi Electromechanical key to the future net operating profit after tax valuation,capital structure and weighted average cost of capital and other factors predicted.And analyzes the synergies and synergies arising after the merger brings EVA value,step by step in accordance with established valuation models for enterprise value with wisdom electromechanical evaluated.In this paper,the final valuation of the Tongzhi Electromechanical and YinHe Electronics consideration in the merger actually paid basic agreement to further illustrate the effectiveness of the model.Meanwhile,the paper also points out the shortcomings of EVA-based M&A target company valuation model,and proposed the need to use the model in question acquisitions valuing the target company should be noted that,for the M&A business is more reasonable use enterprise value valuation method provides a new way of thinking and choices.