Case Analysis On The Valuation Of Little Swan In Acquisition By Midea

In the early1950s, along with the arising equity market in the developed countries inthe west here appeared Business Valuation, which has been fully mature and widelyapplied in practice after adequate study and development. In China, business valuationresearch started comparatively lately, but with the advance of market economy, largenumbers of corporate mergers and acquisitions, scientific and rational assessment ofenterprise value to determine the appropriate price, it plays an important role in businessmergers and acquisitions of the country. Business valuation data becomes an importantbasis of investment decisions and strategic decisions for managers and investors.In this paper, combined with the situation of China’s home appliance industry, weadopt theoretical research and case study to select a appropriate valuation method toexplore ways of acquisition targets. The first part introduces the background andsignificance of this study, presented problems of this research topic——enterprisevaluation.in our country. Secondly studies of the subject at home and abroad areintroduced, elaborated the thesis’s ideas and methods. The second part focuses on mergerand acquisition in the target company’s valuation, and solves the merger model selectionproblem of enterprise valuation. The third and fourth parts takes the acquisition of WuxiLittle Swan by Midea as case study, analyzing the characteristics and maturity of homeappliances industry, and selecting the discounted free cash flow model of the targetcompany little Swan for financial analysis and valuation according to Midea’s acquisitionmotivation. Finally, actual calculation of free cash flow with the previously predictedvalues are compared in order to verify the model value for the validity of Little Swan, andthe case concluded.