A Study On Valuating Cross-border M & A Of Chinese Companies

With the beginning of China's reform and opening up in 1978, the Chinese economy is closing to the world, and get to the international practice.Foreign-funded enterprises have entered in our country, set up factories in China, China's international trade is also growing year by year, these facts show that Chinese economy has integrated into the international economy. Since China has accessed to WTO, China is even more difficult to resist international, foreign companies began to acquisite Chinese companies, the merger of Chinese enterprises have been restructed constantly, which will enable enterprises to increase efficiency and create more value. The dawn of the new century, Chinese companies have begun a bold attempt to cross-border mergers and acquisitions, for we are still in the preliminary stage, cross-border M&A failure could result in many issues, pricing is one of them, how to identify and understand the pricing is the key.This study first analyse Chinese cross-border mergers and acquisitions in industry, location selection, and then introduced book value approach,market comparison approach and discounted cash flow method, and discusses their respective advantages and disadvantages and application conditions, and then use the book value approach,market approach, discounted cash flow method to calculate cross-border M&A financial prices, at the end, analysis and quantify the factors that affect the pricing of cross-border mergers and acquisitions, resulting in a final pricing.We can find that in calculation of the financial prices,discounted cash flow method is the proper method of calculating cross-border mergers and acquisitions financial prices. It should fully reflect the enterprise value, the price index of the main financial revenue growth,risk-free rate of return, Beta coefficient,the industry risk premium rates, the cost of borrowing rates, discount rates, income tax rates,and revenue growth forecast for the accuracy and the accuracy of the discount rate have great impact on the results. Non-financial factors also affect the final price,the main factors are national and local governments, business management factors, factors and intermediary buyers and sellers bargaining factors, with the expert scoring method to quantify non-financial factors, we can obtain a premium price.Integrated cross-border mergers and acquisitions of financial price and a premium price,cross-border mergers and acquisitions reached a final price, that is, P=price of M&A financial price+premium price.