Research On The M&A Value Evaluation Of The Premiere Era Based On The Free Cash Flow Method

With the advancement of globalization and the transformation and upgrading of China's industrial structure,mergers and acquisitions(M&A)have become a hot topic in China's economic growth.Through the activity of M&A and reorganization,not only can help the Buyout firms improve their scaiable,specialized and intensive industrial layout effectively,but also help the Merged enterprises obtain such a platform to accelerate the optimization and configuration of resources.Looking at the distribution of China's M&A market in recent years,companies operate film and television media have been well recognised by capital market and played an active role in the activities of M&A.Therefore,as an important process of enterprises'merger and acquisition,how to evaluate the intrinsic value of the targeted enterprise,so as to determine a reasonable,lawful,fair and scientific value,is crucial to the realization of the achievement of the enterprise'm&a scheme.Based on the characteristics of the M&A value evaluation of the enterprises engaged in film and television.Firstly this paper introduces several traditional valuation methods and the free cash flow valuation methods through the theoretical part,then compares the advantages,disadvantages and applicability between the different evaluation methods based on the characteristics of film and television industry;Secondly,taking the Premiere Era Company as the case subject of M&A transaction,further proves that the rationality of determining the M&A value based on the free cash flow method on the basis of internal and external analysis of the company's development;By Using the two-phase model of the FCFE valuation method to evaluate the M&A value of the Premiere Era company Company.Through the overall process of time forecasting,data screening and model parameter selection to determine the free cash flow corresponding to the company,s forecast period and perpetual growth period,as well as the discount rate,finally the M&A value of the targeted company on the base date of assets evaluation was obtained.Particularly,in order to avoid the defect of using a single method,EVA test model for M&A was considered comprehensively to prove the M&A transaction decisions were analyzed and evaluated correctly and the rationality of the valuation results.Through the study of this paper,the conlusion is that based on the FCFF model,it is suitable for the enterprises involved in films and televisions like the Premiere Era Company to evaluate their value of mergers and acquisitions.At the same time,the evaluation results can provide reasonable reference price for the increasing activities in the capital market of M&A;what is more,this paper tries to introduce the EVA test model of M&A,which rich the contents of value evaluation and can be used for reference to verify whether the m&a activity has value to the Buyout firms or whether the decision to merge is reasonable and feasible.