Corporate Mergers And Acquisitions Based On Discounted Cash Flow Model Valuation Studies

Generally speaking, main capitalist nations have already experienced five timeM&A agitation. With the fact that Chinese economy continues for increases by andM&A law and regulation become perfect, M&A agitation is popular in China. Onevery important part is the value assessment of the target enterprise. The assessment totarget enterprise directly decides the bid. More important is that by estimating targetenterprise, we can have more thorough acquaintance to target enterprise, thereby moreaccurate judge and the feasibility of M&A.Main current value assessment method is the DCF model, the main body of thearticle analyses the application of DCF model, and has built a frame of the valueassessment of corporation of M&A. The drive factor of enterprise's valuation includescapital earning ratio and business earnings growth rates. These two factors Should beconcentrated on in the process of value assessment. Therefore, the article priorityanalyses the impact of the two financial targets over company valuation. And applyDu Pont analysis method whose continuation to be subdivided.By the analysis of the history situation of BaYi steel co. and the entire ironindustry, the article forecast the future of BaYi steel co. Applying DCF model, thearticle changes the qualitative forecast for quantitative financial targets, and carriedout value assessment. The result is far higher than the one BaoShan steel co. gave,which suggest the M&A is administration appropriate. Sensibility tests suggest thespeed of the price of iron and iron ore going up and capital cost impact corporateequity value obviously.