Research On Control Premium And Liquidity Discount In Mergers And Acquisitions Of Listed Companies

M & A(merger and acquisition)is an important institutional arrangement in which the capital markets services entities in economy.The essence of it is the transfer of control,that is,it can help achieve the optimal allocation of resources,push the development of the company and make it more competitive,thus bringing more revenue.So control premium phenomenon are shown.When assessing the value of listed companies in corporate mergers and acquisitions,acquisition targets are generally non-listed companies,and with a purpose of gaining control rights.Then control premium and liquidity discounts often exist simultaneously.In assessing practice,although some evaluators will consider control premium and liquidity discount,most of them often ignore this.Researches on liquidity discounts and control premium in mergers and acquisitions valuation have great significance in both theoretical and practical levels.This paper focuses on comprehensive analysis of key issues in M & A valuation to improve the accuracy of valuation,and promote the healthy development of China's M & A market.Firstly,the paper summarized theoretical and empirical research results regarding control premium and liquidity discount in listed companies merger pricing process,and pointed out flaws and problems that exist in current studies to make a theoretical basis for the discussion of this paper.Then,the paper discussed the current situation of control premium and liquidity discounts in valuation,as well as the methods commonly used.Empirical analysis are used to analyze factors that affect control premium.At last,the paper also discussed problems and propose recommendations for improvement for development of valuation of listed companies in mergers and acquisitions in China.We hope this research can help to provide reference in valuation practice.