A Study On Valuation In Overseas M&A Of General Aviation Industry

As the continuously strong of our country’s economy competitiveness, China’s general aviation industry is now facing the ever best market opportunity. However, compared with the international general aviation industry, our country’s foundation is quite weak. Based on the proven practice, overseas acquisition is a necessary and important way to help our country realize leap-forward development in this field. Successful acquisition will promote the enterprises’ development, while the failure will make tough difficulties. One of the most important reasons leading to the failure is the incorrect valuation made on the target enterprise. Therefore, it is extremely important to make a reasonable valuation in the process of acquisition.This article summarize the overall development of general aviation industry at home and abroad, through comparison and analysis of industry market’s gap, pointing out our country’s industry lag far behind the other developed countries, analyzing the contributions of acquisition to the industry, and further illustrate the significance of acquisition valuation. By introducing a few valuation theories that are commonly used internationally, we analyze their advantages and disadvantages as well as application conditions. Furthermore, the article focus on the case study on our country’s general aviation enterprise’s overseas acquisition, which combined the two valuation methods, that are replacement cost methods and discounted cash flow, to evaluate the enterprise value through innovative input of different parameters. Based on this above, combining our country’s national conditions to put forward suggestions on the industry acquisition valuation: that are considering the characteristics of industry and application conditions of valuation methods, and more effective way to ensure the target is to make combination of valuation methods. It is hoped to benefit our country’s development on general aviation industry by the research on both theory and practice.The conclusion to the article: considering the current situation of our country’s general aviation industry and characteristics of market and politics, to suggest the improvement of acquisition valuation, which should not only select appropriate methods, but also combining many factors, such as mechanism, market, incentive and government policy etc., to input the parameters to valuation models, to do this can greatly help our country’s general aviation enterprises step on the road of marketization and standardization, to further improve the competitiveness of general aviation industry’s acquisition.