An Application Research On Real Options In Mergers & Acquisitions

Mergers&Acquisitions is an important way to expand the enterprises'scale and improve their core competitiveness. Correctly calculating the target enterprise's value is key to successfully carrying out Mergers&Acquisitions. However, the traditional methods are inadequate and imperfect in the evaluation of the Mergers&Acquisitions of an enterprise, because they overlooked the flexibility that the enterprises have during the Mergers&Acquisitions process. Therefore, this thesis , aiming at solving the above problems, puts forward a new evaluation method , namely, the real options in the application of enterprises'Mergers&Acquisitions. By systematic elaborations on traditional evaluation theories and real options theories, this thesis makes it clear that real options is suitable in the volatile circumstances of enterprises'value evaluation. Also, the thesis explores how to apply real options theory to the evaluation of domestic enterprises'Mergers&Acquisitions.The results of this thesis reveals that real options are of great application value to the Mergers&Acquisitions activities of domestic enterprises in the following two aspects. First, it carries out equity evaluation to the ST target enterprises. Second, it carries out evaluations of the investment opportunities from the Mergers&Acquisitions. Furthermore, this thesis puts forward the restrictive conditions which make real options valuable during enterprises'Mergers&Acquisitions and provides meaningful references for the correct understanding of the real option values in the process of enterprise's Mergers&Acquisitions.