Research On Real Option Model In Valuating The Synergy Effects Of M&A

Enterprise mergers have been over a hundred years.Driven by market forces,thousands of companies have achieved leapfrog development in the process of mergers.Throughout China’s overseas mergers and acquisitions process,the number and amount of mergers and acquisitions are increasing,and bankrupt mergers and acquisitions are also increasing.Because bankrupt mergers and acquisitions have their own particularities,they have greater growth and uncertainty.The real option rule just happens to be able to better assess the uncertainty value of the enterprise,reduce the blind merger and acquisition behavior of the enterprise,provide more accurate information for the enterprise decision-making,and increase the success rate of the enterprise’s overseas mergers and acquisitions.There is a synergy effect in the merger and acquisition of enterprises,and the value generated by the synergy effect should be included in the valuation of the target enterprise.In order to calculate the M&A value of the target enterprise at the time of merger and acquisition,this paper will introduce the real option theory,and use the option on the value of the expected synergy.Model to estimate.Firstly,this paper compares the characteristics of M&A synergies with the characteristics of real options,and finds the feasibility of B-S option model for predicting the value of synergies.Then,this paper introduces the classic bankruptcy merger case—the merger process of CIMC’s acquisition of Ziegler,the motive of mergers and acquisitions,and the factors that produce synergy.On this basis,the cash flow discount model is combined with the real option model.The target company conducts the valuation,and finally determines its final reasonable merger value by evaluating the adjustment coefficient,and finds that the estimated enterprise value is higher than the actual transaction price,indicating that Ziegler’s value is undervalued in the merger.The research results show that the real option model can effectively estimate the uncertainty value of the target enterprise in the merger by synergy,which can help the company to provide the basis for strategic direction,investment budget and risk control,and improve the efficiency of enterprise investment.Improve the success rate of mergers and acquisitions.On the one hand,the research in this paper can reduce the blindness of enterprise investment and formulate reasonable transaction prices.On the other hand,it can make enterprises pay more attention to the role of synergy,strengthen the efficiency of subsequent integration of enterprises,and improve the performance of mergers and acquisitions.