The Application Of Market Method In M & A Valuation Of Securities

Enterprise value appraised provides an important basis for M&A pricing. In the past 30 years securities industry had experienced two M & A wave, and ushering a new round of wave. Ended December 31,2015, Nationwide 125 securities companies had total assets of 6.42 trillion Yuan, net assets of 1.45 trillion Yuan and net capital of 1.25 trillion Yuan. However, the number of the brokerage who has net capital of more than 10 billion is just more than 20, so the industry concentration is relatively low. Meantime, the experience in developed countries shows that no matter what kind of strategy these companies will make, M&A is going to be a necessary direction for the future.Statistics show that more than 70% of the cases used Market valuation methods according to M&A case the securities industry during 2006-2016.3, and used its result as the final assessment result. So it is necessary to conduct a study of the securities industry M&A. This paper uses a modified M&A market approach considering the features and risk of securities industry to analysis a case about Oceanwide Holdings being merged by Livelihood securities, focusing on improving the market approach used in the securities industry M&A.The study found that the result of the improved market valuation method had a higher credibility. Simultaneously, the paper concludes:Asset value multiplier is more applicable than earnings multiplier to the securities industry; entropy method, fuzzy method can be more effectively used to select comparable companies; B-S Real Option method can assess the value of synergies, to make up for the shortcomings of traditional market approach...