A Study On Valuation Methods In M&A Of Corporations

In recent years, the M&A activities are getting increasingly dynamic in the Chinese capital market. The M&A has always been one of the topics attracted by the academic world, and it draws even more attention of the scholars about how to improve the effectiveness of the M&A activities. Beyond all doubts, there is more than one research perspective on this question. This paper will do the analysis and research from the perspective of value assessment. As we all know that the value assessment is one of the key links of the M&A activities, a proper pricing can be achieved with scientific methods and reasonable hypothesis within certain limits. Also, it will make the acquirer avoid some unnecessary risks.This paper aims to analyze and systemize the theories of M&A, value assessment, as well as the significance of value assessment in M&A, to evaluate how the current assessment methods are employed in practice, and how the situation of application, so as to find out what to do to improve it, thus helping the better development of the M&A trade in China. It is starting from this point that the author of this paper put the specific assessment methods into the practical use, combining the practical M&A cases, standing on the shoulder of the worldly famous scholars, and doing the analysis and research by adopting two academic research methodologies, two common methods, namely, the qualitative analysis method and the quantitative analysis method.This paper can be divided into five parts. The first part is the introduction, which introduces the current theories concluded by the academics home and abroad in the field of enterprises value proposition. The aim of this part is to systemize briefly the current theoretical researches home and abroad. The next part mainly explains the theories related to the financial activities of M&A value assessment, and it tells the readers what the value of this financial activity to the whole M &A process.The third part specifically introduces the three enterprise value assessment methods, namely, the income approach, the market approach and the cost approach. The forth part does the verification and differentiation to the different evaluation methods by employing the income approach and cost approach, with the studying case being the Capital shares acquiring Greinworth Environmental Corporation and it gives conclusions about the assessment of this two methods. The fifth part gives the research conclusion of this paper, pointing out the deficiencies of value assessment in China’s M&A activities. The author gives out his own advice and improvement suggestions targeting to these deficiencies.