The Value Assessment Research For Internet Corporation Mergers & Acquisitions

As information technology advances rapidly in recent years,merger and acquisition emerges gradually in Internet enterprises.In order to gain better resources and broader markets,Internet enterprises throng to be part of them.In this case,the value assessment of enterprise is treated as the crucial reference data.Thus,a suitable and accurate valuation model for Internet enterprise helps reduce the risk of merger and acquisition,and promote a healthy development of industry or even the whole market significantly.Yet,due to the soft assets and uncertainty of future earnings,traditional valuation model is unable to assess Internet enterprises' value accurately.Establishing new correction model and exploring the valuation system applicable to Internet industry,is the main research significance of this paper.Through reference to massive domestic and overseas literatures,the paper summarizes several traditional valuation models,introduces their definitions,methods and characteristics,and then points out respective defects and inapplicability in assessing Internet enterprise value.Based on characteristics of Internet industry and DEVA valuation model,a new model is set up,namely the amended DEVA model.Then,the paper presents the model construction approach and the applicability for Internet enterprise.Meanwhile,the effectiveness of the amended DEVA model gets verified through cases of wholly merging and acquiring Youkutudou co.,LTD by Alibaba,thereby reaching the conclusions.Mainly,the original DEVA model is amended from the following aspects: first of all,introduce the industrial adjustment coefficient ?,which brings a more accurate result close to the actual market value of enterprise and avoids systematic error;second,change the number of users involved to active users,and use the common indicator—ARPU(Average Revenue Per User)to represent users' contribution degree,so as to calculate their value;finally,replace the simple square relation with linear relation and exponential relation between Internet enterprise value and users' contribution,namely n·ln(n).As shown in the case,the amended DEVA model is relatively accurate and applicable.In the last conclusion and prospect chapter,it is deemed that the amended DEVA model can be a source of new Internet valuation idea and will be widely used in future Internet merger and acquisition.