Research On Application Of Binary Tree Pricing Model To Valuation In Mergers And Acquisitions Of Chip Enterprises

As a reflection of a country's hard power,overseas M&A is one of the driving forces for China to build an economic and technological power.In recent years,the overall economic situation in our country is expected to improve gradually.At the same time,in the process of steady development to complete the accumulation of economic strength.After accumulating a certain strength,domestic enterprises have set their sights on overseas,aiming to expand overseas and seek high-quality resources through overseas Mergers and Acquisitions.But in the boom of Merger and Acquisition,a great number of companies failed,quite a few of them failed due to those valuations of target enterprises are not accurate enough.And goodwill impairment may be due to the acquisition company's inability to achieve established performance targets.Therefore,choosing a reasonable valuation method has important meaning to the scientific and exact valuation of the target enterprise and to the sustainable and steady development of the enterprise in the future.This paper mainly studies the feasibility and applicability of the binary tree model in enterprise value evaluation.First of all,this article begins by introducing the research background,significance and so on.Secondly,it reviews the theoretical research and application results of Chinese and foreign experts and scholars in the field of real options,as well as the achievements of others in the field of valuation of overseas invested enterprises.Meanwhile,they are summarized into a summary.On this basis,starting from the basic principles of each method,the applicability of each method is studied by inductive comparison.Thirdly,it introduces the case of Company A's merger with Company B,the motivation and process of the merger.Then it uses the binary tree model to estimate the enterprise value of Company B,and then makes a comparative analysis of the valuation results and the evaluation results issued by the evaluation agency.Based on the actual operating conditions after the merger and acquisition,it tests the possibility of the valuation results and verifies the superiority of the application of the model.Afterwards,the scientific and rational evaluation results are verified by combining the M&A performance of Company A.At last,the significance of applying the binary tree model to the target resource value evaluation in overseas mergers and acquisitions of semiconductor chip enterprises is realized.At the same time,I have gained some useful enlightenment.They can be concluded that:(1)The value of option features contained in Company B has not been well reflected when it is evaluated by the market method and the income method.However,the binary tree option pricing model combines the traditional valuation method into consideration of this part of the option value of the uncertainty in the operation after mergers and acquisitions into the overall value of the enterprise.In the case of this article,the valuation results scientifically and comprehensively reflect the overall value of the company B.(2)All three traditional assessment methods have their advantages,but inherent limitations of them limit their applicability.Real option model has certain advantages in the field of enterprise valuation,which enriches the existing evaluation system.(3)Valuation of the target company is crucial in overseas mergers and acquisitions deals.Compared with the conventional approaches,using the Binary Tree Model can get a more accurate and objective valuation outcome,which is beneficial to reduce the risk of failure in overseas M&A of Chinese enterprises.