Comparison And Analysis Among Valuation Methods Of Target Corporation In Cross-border M&A

Cross-border mergers and acquisitions of Chinese companies are playing a crucial role in industry development,but during the history of Cross-border M&A,Chinese companies experienced many failures due to the mispricing of target companies.The most common valuation methods about target companies are basic asset valuation,P/E,EV/EBITDA ratios,and accurate DCF results depend on investment bank and advisory agency.Real option method is used even less.This thesis aims to compare the results of different methods and apply them into the particular case,aiming to provide domestic corporations with valuation suggestions in cross-border M&A.This thesis analyzes the case of Chem China-Syngenta acquisition,using the method of case study and qualitative analysis as well as quantitative analysis.This thesis first compares the characteristics of different methods,so that the applicability of each in cross-border M&A can be obtained.After the introduction of the case,methods are used to value the target company.By comparing the results of each valuation methods in this case.Final chapter concludes this thesis and provides some suggestions.By using discounting cash flow method,market method(comparable companies,comparable transactions),we conclude that:(1)the selection of valuation method should take specific condition of target company into account.Using real option method can best valuate the target company with proper premium level,the second one is DCF and the most conservative one is market method.(2)Cross-border M&A have specific and special risk factor,real option method can best measure those risks;(3)When Chinese companies are launching cross-border acquisition,a valuation team should be built to strengthen the pricing ability.