Research On The Application Of Value Evaluation Method Of Target Enterprise In M&A

As the economic development in the worldwide and the continuous improvement of the capital system,merger and acquisition increasingly has become a development path chosen by more and more enterprises.For new investment,merger and acquisition has many advantages,such as rapidly entering the target field to form scale,crossing the barriers to entry between industries,and rapid integration of advantageous resources.Therefore,in today's trend of globalization,Chinese enterprises are increasingly involved in merger and acquisition,which will surely become a trend and trend in the future.In a series of process of merger and acquisition,the results of enterprise value assessment as an important reference standard for merger and acquisition consideration,value assessment is particularly important,reasonable assessment of enterprise value for subsequent merger and acquisition plays a far-reaching role.Generally speaking,there are three methods of enterprise value evaluation,cost approach,income approach and market approach.All in all,the application of income approach and market approach is the most common,and the theory of income approach is relatively perfect,at the same time,the application of this evaluation method is also difficult.In order to better evaluate the value of the target enterprise,this paper chooses the free cash flow model FCFF in the income approach to analyze and evaluate the target enterprise in detail.For free cash flow,based on the assumption of continuing operation,this paper divides the development stage of an enterprise into the detailed forecast stage and the sustainable stage.Based on the financial data of the first 5-6 years,the free cash flow model of the detailed forecast stage is predicted,and the subsequent stage is predicted based on the macroeconomic situation.For discount rate,i.e.,the calculation of the weighted cost of capital,need to solve the cost of equity capital and debt capital cost at the same time,the equity capital cost of using the capital asset pricing model CAPM,the market rate of return and the beta coefficient is a difficult point,because of the target enterprise for listed company,the Shanghai and shenzhen two city,so five years to the csi 300 index of monthly average yield as the market rate of return,and with the target enterprise stock monthly returns for regression analysis to solve the beta.In the meanwhile,At the same time,the market method is used to evaluate the value of the target enterprise,and a comparative analysis of the evaluation process and results of the two approachs.The merged party Dongjiang Environmental Protection selected in this paper is a "National Resource Conservation and Environmental Protection Demonstration Project Unit".In the era of advocating energy saving and emission reduction,we need to pay attention to companies in the green cleaning industry.After considering the industry background and the specific situation of the enterprise,and combining relevant theories,the assumptions used in the evaluation approach and the data and indicators required for the calculation are logically derived.According to the final evaluation results,it is found that the FCFF model under the income approach The value of the enterprise under evaluation is relatively close to the evaluation of the price-earnings ratio model under the market approach.Considering the application of the price-earnings ratio approach to the target company,it is decided to use the results of the price-earnings ratio approach as the basis for evaluating the value under the market approach,and use this result Verify the evaluation results of the income approach,compare the final evaluation value with the transaction consideration,and analyze the reasons for the differences,hoping to have some enlightenment for the application of enterprise value evaluation approachs in the environmental protection industry in the future.