Real Options Method In The Application Of The Enterprise Mergers And Acquisitions Valuation

In recent years domestic economy develops rapidly and domestic enterprises grow rapidly.Then the enterprise merger and acquisition activities increase.In mergers and acquisitions,whether we can accurately assess the objective value of the target enterprise is the key factor that decides whether we can merger and regroup successfully.In the past the commonly used method is the discounted cash flow method in mergers and acquisitions,but this method has some defects.It does not take into account the flexible value in the process of operation and management.In order to promote the m&a transactions,they both need to evaluate the enterprise valuation reasonably and objectively.The traditional valuation methods are adequate,but they also have their drawbacks.Therefore,this article introduces the real options method and combines with the traditional methods at the same time.And we can reflect the real value of the m&a more objectively and reasonably.And we can provide some references for the later mergers and acquisitions.In the process of mergers and acquisitions it contains real option.This article first divides the types of real options.Then this article deduces B-S option pricing model and the binary tree option pricing model in detail.And this article points out the premise conditions and the affected factors when we use these models.Then this article has a case analysis.The discounted cash flow method is used to assess the overall value of the target enterprise.Then this article uses the real option method to evaluate the real option value in the process of acquisition.And finally we calculate the total value of the objective truth.This article analyzes the actual case and proves that the real option model is more suitable and more effective in assessing the value of the target enterprise.Finally this article points out the innovations and deficiencies and expects the application of real options method in the future.