The Application Of DCF Method In Mergers And Acquisitions Valuation

With the development of domestic capital market and acceleration of industrial transformation,mergers and acquisitions(M&A)has became a crucial way to improve resource allocation as well as enterprise expansion.In terms of M&A,the company evaluation plays a key role in the whole progress.We can not derive expected value from classical enterprise valuation models due to several factors which include synergy valuation,premium,multiple dimensionality and others.Therefore,there is the most important task for mergers and investors that find a way to improve traditional valuation method for target company valuation.This paper argues that it is crucial that domestic company makes improvement on traditional discount cash flow method which is based on the theoretical basis of mergers & acquisitions valuation,by the meantime,it is important that this paper makes contribution to provide a new vision of mergers & acquisitions valuation theory,an advice of valuation improvement as well as an assessment of application.According to the fact that,this paper can provide a guidance on theoretical research of mergers & acquisitions valuation.There are many domestic and overseas documents for the application of corporate mergers and acquisitions valuation,however,most of them overestimate the influence of mathematical models and overlook the affection of objective factors in valuation progress.At the same time,many academics make redundant researches on the applicability and feasibility of cash flow discount method and can not pay attention on how to solve difficulties of application and how to improve the method of research.This paper mainly demonstrates applications of company mergers and acquisitions valuation from the perspective of discounted cash flow model method,tries to avoid the influence of mergers and acquisitions synergistic effect on valuation and the impact of uncertainty from characteristics of mergers & acquisitions with multiple stage in the traditional enterprise mergers & acquisitions valuation method.From the perspective of synergistic effect,this paper tries to combine with mergers and acquisitions valuation,synergies effects,discounted cash flow application and other knowledge in order to improve and apply the new method of mergers and acquisitions valuation.It would be more reasonable if the application of discounted cash flow method which is based on the mergers and acquisitions valuation combines with the case of the merger and acquisition between Mengniu and YSL.At the same time,we could improveapplicability and accuracy of Mengniu mergers and acquisitions valuation with guidance of the theoretical knowledge in advance.This paper mainly adopts literature analysis method and the case analysis method.First of all,this paper introduces the background,implication and literature review of research,at the same time,it describes a blueprint of research ideas and methods.Secondly,this paper demonstrates the origin and composition of mergers and acquisitions value,focuses on the characteristics of the selection method of mergers and acquisitions valuation method,such as,consideration of synergistic effect,application of multiple stage valuation,using of correlation coefficient for reducing premium risk.Thirdly,it mainly illustrates mergers & acquisitions key factors,for example,profiles of two company,characteristics,motivation,progress of mergers and acquisitions,and highlights the characteristics of mergers & acquisitions and mergers & acquisitions incentives for Mengniu acquisition of YSL mergers & acquisitions valuation.By the meantime,with analysis of valuation background,value and risk of mergers,this paper builds valuation model which is based on discounted cash flow method and estimates value of YSL with this model.Finally,the validity of the case study is evaluated by the discussion of the previous chapters,the relevant deficiencies are supported and the corresponding application suggestions are put forward to provide practical guidance for the future valuation of mergers & acquisitions.The characteristics of this paper are investigation of YSL valuation and evaluation of synergistic effect value which are based on relevant literature,at the same time,this paper focus on valuation stage before the merger with makes comparison between final offer and estimated offer which can provide a guidance for other dairy mergers,as a result,it can make contribution to boosting the success rate of mergers and acquisitions.