The Internet Enterprise Valuation Of Mergers And Acquisitions Assessment Based On Real Option Theory

The Internet enterprise is an innovation-oriented company with strong motivation to promote itself through mergers and acquisitions. With the development of capital market, the Internet enterprise value assessment plays a more and more significant role in the trading market. The value of the Internet enterprise will be underestimated if we only use the traditional methods for the assessment, because the option’s value of the enterprise is too enormous to ignore. In order to assess the Internet enterprise more accurately, this article introduce the theory of mergers and acquisitions firstly. By comparing the strength and the disadvantage of the traditional methods, the scholar find that real options theory is more suitable to the Internet enterprise while evaluating the whole value of the company.This article uses the real option theory B-S model to evaluate the value of the Internet enterprise, causing the managers of the companies to build up the idea of creating value for the shareholders. When the corporate operators stand at the height of strategic investment, the long-term interests of enterprise will not be sacrificed to the short-term interests. Considering the revenue and the risk of investment, this article apply the real option theory to the assessment of the added value.This article has six sections in total:the first chapter is an introduction, respectively reveals the background, purpose, methods, research current situation and the characteristic and creation of this article. The second part analyzes the newest research of the Internet enterprise value assessment in the perspective of the mergers and acquisitions. The third chapter analyzes the theory frame of the Internet enterprise’s value evaluation, separately present the characteristics of network company and the shortages of traditional assessing method. The forth part introduces the concept of real options, and discusses the Option Pricing Theory under B-S model. The fifth part illustrates how to use the B-S model to assess enterprise’s value. The six chapter summarizes at last, and illustrates something important to notice.