The Application Research Of Real Option Method In The Valuation Of Cross-border M&A

With the advancement of enterprise internationalization,more and more Chinese enterprises join the international M&A market.However,success rate is not high because Chinese companies lack experience.Enterprise valuation is a key part of M&A decision-making,which embodies the value of target enterprise.Reasonable valuation improves the success rate of transnational M&A,having an important influence on success of M&A.This thesis summarizes the current widely used methods in cross-border M&A valuation,and gets the defects of traditional methods.Then by analyzing the advantages of real option method,it points out that the real option method can well solve the disadvantages of traditional methods.Lastly,it discusses the using of real option method in practice.This thesis is divided into six parts.The first part is the introduction of whole paper.The second part reviews and summarizes enterprise valuation theory and real option theory.The third part discusses the current situation of cross-border M&A,and summarizes the main motivation types;then sum up the primary using valuation methods and the disadvantages of them.In the fourth part,the paper discuss the using of real option method,it goes:suitability,advantage,procedure of using and matters needing attention;then it gets out that cross-border M&A have the characteristics of options,which is suitable for the real option method for valuation,and concludes that real option method can resolve the defects of traditional valuation methods.In the fifth part,combined with a real translational M&A case happened in our country in recent years,this thesis applies real option method to get the reasonable valuations,which will display the using process of real option method.The sixth part summarizes the whole thesis,and points out the works for research,having a conclusion of the paper.