Research On The Selection Of Comparable Companies In The Evaluation Of M&A Of Listed Companies

Mergers and acquisitions of listed companies are frequent,and valuation is a key link in mergers and acquisitions.With the gradual improvement of the market,it is increasingly important to use the market method to evaluate M&A.However,one of the reasons why it is difficult to use the market method is that the selection of comparable companies is too subjective.The selection of comparable companies has become a problem that must be solved in the M&A valuation of listed companies.This paper focuses on the study of the selection of comparable companies in the market method of M&A valuation of listed companies.First,it discusses the difficulties and key points in the evaluation of market method,analyzes the current situation of the selection of comparable companies in practical application,and finds that the selection of comparable companies is more subjective.Then,based on theoretical analysis,it divides the impact of the selection of comparable companies into two levels,one is the industry level,This paper studies the impact of the common external economic environment on the selection of comparable companies,and the other is at the level of enterprises.At the industry level,this paper uses Gini coefficient to measure the dispersion degree of enterprise distribution in the industry,and analyzes the distribution characteristics of comparable company groups;at the enterprise level,this paper measures the differences of enterprise characteristics through financial indicators,constructs the feature space with the financial indicators of the company,matches the high-dimensional similarity of comparable company groups with KNN algorithm,and quickly selects the distance in the feature space The nearest K companies,as comparable companies.Finally,the comparative company selection model is applied to software and information technology service industry for case analysis.In the case analysis part,firstly,the dispersion degree of enterprises in 10 industries including software and information technology service industry is measured.Then,WangDa Software is selected as the target company in the software and technology service industry,and 196 listed companies in the industry are selected as the comparable company group.The analysis of the dispersion degree of enterprise distribution shows that the dispersion degree index of enterprise distribution is larger than the index in other traditional industries.According to the characteristics of large degree of enterprise dispersion in software and information technology service industry,based on the comparable company model of KNN algorithm,this paper constructs a high-dimensional feature space of 15 matching indexes to measure the similarity and match the comparable companies more comprehensively;on the other hand,in the determination of index weight,entropy weight method is used to determine the weight to improve the applicability of the model,and K that the value is set to 5,five closest companies are selected from the target company group as comparable companies,and the results are verified.The result of case analysis shows that the model can quickly select five comparable companies from 196 companies,and the five comparable companies selected by the model are similar to the target company in the main business,and the difference rate between the average market value ratio of the five comparable companies and the target company is only 20.19%,so the model is feasible to select comparable companies.In this paper,it is found that the distribution of software and information technology service industry enterprises is highly discrete,so it is difficult to find comparable companies.The comparable company selection model based on KNN algorithm can build a high-dimensional feature space,conduct a more comprehensive matching,and weaken the differences between enterprises.This method is suitable for the selection of comparable companies in the M & A valuation of listed companies.To sum up,in the M & A valuation of listed companies,the choice of comparable companies can be analyzed in two levels: Industry and enterprise.This paper innovatively studies the impact of enterprise distribution differences on the choice of comparable companies,and uses KNN algorithm to match high dimensions to determine comparable companies,which is conducive to the promotion and application of market method in China,it also widens the way for the market law theory exploration of M &a valuation of listed enterprises.