Research On Value Measurement Of Synergy Effect In Merger&Acquisition

M&A is an important way of adjusting and reforming for enterprises, and is also the effective approach of redistribution the society resources newly. The reason for enterprises carrying out mergers is looking for synergy effect. The number of companies’ mergers and acquisitions showed rapid development recently. However, some studies have shown that most mergers do not achieve the expected results. Through carefully analysis, it’s not difficult to find that the reason is the one-sided understanding of M&A, and lacking reasonable forecast of synergy effect. Therefore, accurately measure the value of synergy effect is the key to the success of M&A. The value measurement of synergy effect is one of the difficult problems in theory of value in M&A, and there’s no agreed model in this aspect. So it’s of great theoretical and practical meaning to research the value measurement of synergy effect in M&A.On the basis of brief reviews of value measurement methods in existence, measure the value of M&A synergy effect from the perspective of the overall value which based on the discounted cash flow method. Though analysis of the traditional discounted cash flow method, find the defects in cash flow projections, discounted rate selections, and amend the method from the two aspects. In addition, amend the value measurement method by adding the reduction coefficient. Select a specific M&A case, and test the validity of the measurement method by applying in the case. The studies on value measurement method of synergy effect are summarized as follows:First, introduce the concept of synergy effect and the basic theory, and classify the synergy effect from different perspectives.Then, analysis the four existing value measurement methods, and find that discounted cash flow method has advantages compared with other three methods. Improvement the cash flow projections and discounted rate selections which affect the accurateness of the method. And remove the competition risk from synergy value by adding the reduction coefficient.Finally, calculate the value of synergy effect in the M&A case with the traditional method and the amended method, analyze differences in measurement results, and evaluate the amended method.