Application Of Real Option Method In Merger And Acquisition Valuation Of Air Transport Enterprises

Merger and acquisition(M&A)is an important means for enterprises to expand production scale and adjust industrial layout under the condition of market economy.The emergence of M&A has brought the capital operation of modern enterprises into a new era.In the developed countries of Europe and America,mergers and acquisitions have appeared for one hundred years.With the continuous development of this century,mergers and acquisitions are not only simple mergers among enterprises,but also provide a new way for long-term investment and long-term strategy of enterprises.Many large enterprises in Europe and the United States are growing step by step through mergers and acquisitions.With the rapid development of global economie integration,mergers and acquisitions have become increasingly frequent.Judging from JPMorgan Chase's Global M&A Prospects for 2019,the global M&A market remains strong in 2018,with a reported volume of $4.1 trillion,the third highest level ever.Trading activities are driven mainly by large transactions of more than $10 billion.In the first six months of 2018,30 large-scale transactions were announced,the highest level ever in the same period,compared with 14 in the first halfof2017.In the wave of horizontal mergers and acquisitions of airlines,because of the uncertainty of airlines'profits,there are many factors affecting enterprises after mergers and acquisitions.Although the traditional cost method,income method and market method have certain applicability,they often cause undervaluation or reasonable valuation because they can not evaluate the option value of this part.Therefore,exploring the application of real option method in the merger and acquisition valuation of air transport enterprises can promote airline valuation to return to rationality and promote fairer transactions between both sides of the transaction.In addition,it is also an important exploration of the practical application of new evaluation methods,which is of great significance to the air transport industry,asset evaluation industry,government and regulatory authorities.