The Application Of DCF Model In Equity Valuation Of Our Country Banking Industry Mergers And Acquisitions

Bank M&A related to the transfer of the underlying equity, options pricing M&core focus, in general, the pricing will make reference to the results of third-party valuation institution assessment of the equity value of the target bank. The results of the assessment is a comprehensive reflection of the assessment process, including the assessment method is one of the key factors, and is associated with the purpose of the evaluation and the types of value. Research methods in particular evaluation purposes, the equity value of M&A assessment is very important. The nature, closer to the M&A activity to assess the results of the assessment can provide a useful reference value for mergers and acquisitions both sides can promote mergers and acquisitions forward.The discounted cash flow method is commonly used in business valuation method, but previous studies is limited to its general application to all industries, or the application of a particular industry, the banking industry and general corporate, bank government very strict control of the industry, the capital adequacy ratio and core capital adequacy ratio clearly defined, its greatest feature is to rely on credit to stay afloat, the main income-dependent deposit and lending interest income. Need to take into account the safety of operations, liquidity, profitability principle, and are faced with more market risk, interest rate risk, credit risk. The discounted cash flow method to the equity value of mergers and acquisitions in the banking assessment will have different areas requiring attention.This article is based on bank mergers and acquisitions option pricing involves the need to refer to the target bank’s shareholders equity value of the investment value to determine the purpose of this assessment, cash flow discounted assess the equity value of the target bank, the key parameters in the model of future cash flows, the discount rate combined with bank characteristics is how to determine what are the factors that affect. Select a typical case of Shenzhen Development Bank merged with Ping An Bank analysis need to refer to the value of the entire interest of the shareholders of Ping An Bank to determine the purpose of this assessment option pricing in Ping An Bank, Ping An Bank’s equity value assessment process discussed in detail, cash flow analysis Testimonials Case fold The key factors of the present method of cash flow and discount rate the specific determination process and results of the valuation of the impact of the transfer of real equity prices, on the basis of summing up the case, the analysis of the discounted cash flow method should be noted that in the bank M&A valuation and worth learning experience. In order to make a useful exploration of this method in the future bank mergers and acquisitions better use of the equity value assessment.This paper is divided into six chapters:Chapter1:Introduction. In this chapter the research background, purpose and significance are described. The point of the full text of the core research and research ideas.Chapter2:A Literature Review. Home and abroad, the bank M&A value assessment related research, combing domestic literature is the choice of bank M&A value assessment method and the discounted cash flow method based on certain evaluation purposes specific application to the bank M&A options The less value assessment studies, which is caused by the theoretical background of this study.Chapter3:theoretical analysis. First, the basic concepts of bank mergers and acquisitions, discounted cash flow method, the equity value assessment of a brief introduction, the theoretical basis of the discounted cash flow method, such as capital value theory, MM theory, theory of free cash flow, discount rate theory the nature and requirements of the sort, followed by a brief assessment of enterprise value and applicability, good theory pave the way for the below study.Chapter4:is the discounted cash flow method to assess equity value of bank mergers and acquisitions specific application for analysis. First defined the definition of bank mergers and acquisitions equity value assessment, and then determine the purpose of the assessment-involved in the merger to shareholders’ total equity value and investment value type, followed by analysis of the applicability of the discounted cash flow method to the equity value of mergers and acquisitions in the banking assessment the construction of the model and to determine these parameters.Chapter5:selected cases-Shenzhen Development Bank merged with Ping An Bank, Ping An Bank equity value assessment discussed in detail. Reasons for the selection of cases, mergers and acquisitions in both the background and moving account,followed by case assessment of the purpose and value of type clear, on this basis, combined with Ping An Bank’s financial results of operations for the assessment of future cash flows and the discount rate The process of determining the comments and, finally, the whole process of the case.Chapter6:evaluation purposes and value types to determine future cash flow projections, the discount rate, the information collection summed up the case Implications.In this paper, a method of combining normative research and case studies, normative research related concepts, theoretical basis and the discounted cash flow method in bank mergers and acquisitions of Shares Valuation summarizes, case studies specific analysis is merged with Ping An Bank, Shenzhen Development Ping An Bank’s equity value of the evaluation process.The main contribution of this paper is:The discounted cash flow method based on certain evaluation purposes and value types, the equity value of mergers and acquisitions in the banking evaluation of model parameters method for determining the future cash flows and the discount rate.