Studies On Business Valuation Method For M&A

Mergers and Acquisitions is a way of the Enterprise growth from outside,M&A is a product of the modern market economy.M&A history of Western countries is over 100 years,the theory and practice of M&A relatively mature,and the M&A of Chinese enterprises is only 20 years,the area needs deep researching.Enterprise Valuation is a very important content in the enterprises M&A.is the focus of merger negotiations,but also the focus of M&A and difficulties,how to reasonably determine the value of target companies has been a troubled side of mergers and acquisitions,one of the important issues.Business valuation is a complex systematic project,involving many fields,that is science is also art,the need for a combination of quantitative and qualitative.There are many methods in Business valuation.P/E method,Cash flow method, real options,and the EVA method.they have advantages and disadvantages.Cash flow objectives through the enterprise's future cash flows discounted to determine its value.The value reflects the decision in the present value of future earnings.P/E method is the relative market-based comparative law perspective.The goal through the establishment of comparable business enterprises and determine the value.These two methods are the mainstream approach,the value of the assets in China's specific economic context,has been the main assessment methods,with the development of property rights transactions,the drawbacks of this method more and more prominent. Real options method is a new method,it is more suitable for the assessment of high-tech enterprises.With economic development,M & A both sides need to be more scientific and reasonable method to assess the value of the target enterprise,the enterprise value of M&A in the assessment methods must be improvements or innovation.This article focuses on cash flow and price/earnings method carried out in-depth analysis,a variety of valuation methods is calculated from a different perspective of the enterprise value,has its own advantages and limitations of a single assessment method maymake the results of relatively large deviation;Moreover,in view of the higher failure rate of mergers and acquisitions,liquidation value method proposed in the M&A valuation should be reflected in the establishment of the failure probability of mergers and acquisitions,the success of the weighted probability model.In this paper, weighted and evaluation model established by empirical analysis done,and then draw the relevant conclusions.Finally,this article sums up and makes recommendations to further clarify the work done and the direction of future efforts,expecting to make effort to the research of the theories of enterprise value and methods.