The Application Of Real Option Method In The Value Assessment Of Transnational Mergers And Acquisitions

Merger and acquisition(M&A)have been a hot topic in the field of theory and industry in recent years.Merger and acquisition have become a frequent phenomenon in the field of economy and an important means for enterprises to optimize the allocation of resources.In M&A,the intrinsic value of the target enterprise is the basis to determine the final transaction price of M&A,and the accurate evaluation of the intrinsic value of the target enterprise is the key factor for the success of M&A.In M&A,the traditional evaluation methods include market method,income method and cost method.Traditional evaluation methods are all static analysis methods,which fail to take into account the value brought to the enterprise by the uncertainty in the future and neglect the flexibility of management decisions.Therefore,the value of the target enterprise cannot be better evaluated and may even cause the underestimation of the enterprise value,thus affecting the acquisition transaction.The real option method is a dynamic analysis method,which regards the enterprise merger and acquisition strategy as an expansion right.The option owned by the enterprise in the uncertain environment is valuable,and the value can be quantified.Therefore,the application of real option theory to enterprise value assessment in M&A makes up for the deficiency of traditional methods and provides a new way of thinking for decision makers.This paper selects the case of Qingdao Haier's acquisition of general household appliances,simulates the whole process of the application of real option method in the value evaluation of target enterprises in the acquisition,and analyzes the evaluation results.The real option method provides a new perspective for enterprise value assessment,but it also has some limitations.At the end of this paper,the limitations of the real option method in practical application are summarized,and the prospect of the future is expressed.