Research On The Valuation Of M&A Value Of Iron&Steel Enterprises

With the continuous development of science and technology,the consumption of steel is gradually decreasing,coupled with the downward pressure on the economy,iron and steel enterprises are vulnerable to macroeconomic impacts for cyclical industry enterprises.According to the development track of developed countries,the gradual reduction of steel demand is also the trend of future development.For now,China's steel industry is in a “severe winter” period.In 2015,China's steel industry as a whole was in a state of loss.In the face of overcapacity,the central government proposed a supply-side structural reform,mainly through the merger and reorganization of steel companies to achieve the goal of optimizing the industrial structure.This has brought new opportunities to the troubled steel companies,while the steel companies have formed a polarization of survival and the fittest.On the one hand,some low-efficiency enterprises that have not been able to pass the state audits and have been in a state of loss for a long time will be eliminated.According to the policy,they can choose to close down or choose to be merged and reorganized.On the other hand,some actively seek transformation or improvement.A company with a strong performance can continue to develop if it is successful in transformation.Based on the theory of financial management,this paper combines the research methods of case analysis.According to the current situation and development trend of the steel industry,this paper takes Shanghai BAOSTEEL company acquisition of WISCO as an example,and combines the free cash flow discount method with the real option method to analyze and study and establish a valuation model.Firstly,the free cash flow of WISCO will be predicted.Secondly,the forecast period and continuous value of WISCO and WACC will be determined.Combined with the synergy effect brought by mergers and acquisitions,the free cash flow discounted valuation range of WISCO will be determined,and the option value of WISCO will be calculated.The overall value range of WISCO is obtained.Based on the history of M&A activities domestic and abroad,this paper summarizes the motivations and effects of M&A.By reading the literature on domestic and foreign M&A valuations and cyclical industry valuations,this paper summarizes the existing research results.Research direction and research purposes;Then,it introduces the traditional enterprise value assessment method,analyzes the applicable conditions of various evaluation methods and evaluation models,and combines the characteristics of cyclical industry enterprises to analyze the influencing factors of enterprise valuation and judge the applicability of various evaluation methods.Identify value assessment models for steel companies;Finally,through the case of BAOSTEEL company merger with WISCO,using the selected value assessment method,the value evaluation analysis of the target company WISCO will be carried out,which will provide reference for the future value evaluation of the target enterprises in the merger and reorganization of steel enterprises,and provide reference for investors' decision-making.opinion.With the rapid development of China's economy and the gradual advancement of global economic integration,China's steel industry is the basic industry of China's economy.The state is encouraging the merger and reorganization of steel companies to enhance their competitive advantages and enhance industry concentration and international influence.Not only has a competitive advantage compared with domestic enterprises in the same industry,but also better to face the international competitive pressure of the future.Through the research on the M&A activities of the two large steel companies in China,the importance of the evaluation of the value of the target enterprises in the process of M&A is enhanced,and the overall valuation of the target enterprises is carried out,hoping for the merger and acquisition of China's steel enterprises in the future.To learn from the case,improve the quality of mergers and acquisitions of steel companies,so that China's steel companies can continue to develop in the process of mergers and acquisitions,enhance the competitive advantage of enterprises.