The Application Of Discounted Free Cash Flow In The Valuation During The M&A By American A Group

Merger and acquisition(M&A)has already become the major option for multinational investment.During the process of M&A,how to analyze and value the objective company is the basic and significant step.This paper picks up the valuation during the M&A by American A Group to study.After reviewing classical theories and the universal methods of enterprise evaluation,this paper uses the Discounted Free Cash Flow Method to study this merger valuation.In order to value the objective entity reasonably,this paper uses the Michael Porters' Five Forces Model to analyze the reflective industry,Du Pont Analysis to analyze the financial condition of objective entity during the last 5 years,and SWOT Analysis to analyze the operating situation of objective enterprise.In addition,due to a multinational merger,this paper also considers the impact of merger Synergy Effect,the impact of exchange rate fluctuation,the impact of external credit really on the cost of debt,and the impact of affiliated company transfer pricing.Through combing theories with practices,this paper aims to provide some practice,experience,and advice for M&A in China market.This paper has seven chapters.The first chapter outlines the background,the structure of content,the method of study,the contribution and limit of this paper.The second chapter describes domestic and international researches on enterprise valuation.The third chapter presents current methods for valuing a company(Relative Method,EVA Method,Option Method,and Discounted Free Cash Flow Method).The forth chapter analyzes parameters for Discounted Free Cash Flow Method.The fifth chapter focuses on the analysis for American A corporate merger project,including merger background,industry analysis,last 5-year finance analysis,the operation strategy after merger.The sixth chapter is to use the Discounted Free Cash Flow Method to access the value of the objective enterprise.The seventh chapter summarizes the conclusion of this paper,and points out the contribution,limit and next step research in the future.