Research On The Application Of Real Option Method In The Valuation Of Enterprise Merger And Acquisition

With the advent of the 21 st century,most Chinese people have got rid of the problem of food and clothing,and put more emphasis on health.As a result,a large number of investors have set their sights on the booming biomedical industry.In recent years,biomedical enterprises listed,mergers and acquisitions emerge in an endless stream.However,before listing and merger,it is required to have an accurate value evaluation of the acquired enterprises or the enterprises preparing for listing.Biomedical enterprises are characterized by core technology and knowledge support,high operating costs and risks,and high market activity in the industry.Because of these characteristics,there are a lot of potential option value in biomedical enterprises.However,the traditional enterprise value evaluation method cannot accurately evaluate the potential value of this part.Therefore,it will bring relevant risks to the investors and managers of the enterprise.Based on the shortcomings of traditional value evaluation methods in the face of the value evaluation of biomedical enterprises,this paper focuses on the applicability analysis of the real option method to evaluate the value of biomedical enterprises,and introduces the real option model to carry out actual calculation based on specific cases.Based on the actual evaluation results,this paper discusses whether the real option method is applicable to the value evaluation of biomedical enterprises and gives some Suggestions.This paper selects the case of China resources pharmaceutical co.,LTD.'s merger with JiangZhong pharmaceutical co.,LTD.,and calculates the value of the acquired enterprises in the merger by combining the income method and the real option method.Firstly,through literature search,this paper analyzes and summarizes the achievements of domestic and foreign scholars in enterprise value assessment and real option method,and compares the differences of domestic and foreign researches in the literature review.Secondly,the paper introduces the traditional enterprise valuation method and real option method systematically,and explains the application scope,advantages and disadvantages of each method in detail.The applicability of the real option method to evaluate biomedical enterprises is analyzed,which is also a foreshadowing for the following case study.Again,analysis of CRC river pharmaceutical medicine m&a cases: one is the analysis and comparison of the enterprise's development situation,the industry background,the second is the target enterprise value can be divided into two parts,using the free cash flow discount model of two phase model of evaluating the existing assets of biological medicine enterprise value,using the real option method B-s model of biological medicine enterprise of potential option value,and calculation and aggregation two parts of biological pharmaceutical enterprise overall value.Third,the enterprise value calculated in this paper is compared with the actual transaction price of the case.Finally,through comprehensive analysis,it is concluded that the real option methodshould be introduced when evaluating the value of biomedical enterprises,and relevant Suggestions are also put forward.