Value evaluation method in merger and acquisition

Introduction of several commonly used evaluation methods: (1) traditional evaluation ideas and methods 1, and cost-oriented methods include historical cost method and replacement cost method. [1]. The evaluation idea of cost method is from the perspective of enterprise reconstruction, that is, the sum of the costs invested by the enterprise at the evaluation point, or the investment needed to rebuild an enterprise exactly the same as the evaluated enterprise. And take this investment amount as the evaluation value of the target enterprise. The method of cost thinking has great limitations. First of all, this kind of thinking only considers the enterprise value from the perspective of historical investment, but not from the perspective of actual asset efficiency and enterprise operation efficiency. No matter the benefit of the enterprise is good or bad, as long as the original investment amount of the enterprise is the same, the evaluation value is the same. And sometimes inefficient enterprises will have higher evaluation values than efficient enterprises. It does not attach importance to the role of intangible assets in enterprises and does not conform to the principle of comprehensively evaluating the assets of target enterprises. However, the cost thinking method also has its obvious advantages. Based on the historical accounting data of the target enterprise and the price level of the existing market, it avoids the subjective influence of manual prediction of related parameters in other models. In the economic environment with imperfect market mechanism, the cost thinking method is simpler and more effective. Discount thinking Discount thinking adopts the discounted value of the free cash flow of the target enterprise during the strategic planning period as the evaluation value of mergers and acquisitions. TV = ∑ fcft t+t (1+WACC) t (1+WACC) (1) where TV is the combined evaluation value; FCFt is the annual free cash flow; WACC is the discount rate or weighted average cost of capital; Vt is the final value of the target enterprise at the end of the strategic period. All these parameters need to be predicted and estimated. Free cash flow is different from accounting income, operating cash flow and net cash flow. It refers to the extra cash flow that can be generated by an enterprise on the basis of continuous operation, except for the investment required by inventory, plant, equipment, long-term equity and other similar assets [2]. Self-financing cash flow can be obtained by adjusting accounting income. It can also be estimated by Laba Porter's free cash flow forecasting model. fcft = ST 1( 1+gt)I pt( 1tt)(ST 1)I(ft+wt)(2)。 In which: fcft- free cash flow ST- annual sales gt- annual sales growth rate pt- sales profit rate TT- income tax ft- additional fixed capital investment required for every 65,438+0 yuan sales wt- additional working capital investment required for every 65,438+0 yuan sales t- WACC in the strategic planning period formula (65,438+0). It reflects the expected rate of return of the acquirer, that is, the capital cost of M&A investment. If the future risk of acquiring the target enterprise is the same as the total risk of M&A enterprise, the discount rate of cash flow of the target enterprise can be used as the capital cost of M&A enterprise. If it is estimated that M&A will lead to changes in the total risk of enterprises after M&A, it is necessary to use the capital-based asset pricing model to evaluate long-term capital (common stock, preferred stock and long-term debt, etc.). ) make corresponding adjustments. As for the final value of the target enterprise at the end of the strategic planning period, it can be determined by the length of the strategic planning period. If the strategic planning period is long enough, the ultimate value of the target enterprise will be less important. But in practice, the growth model is generally used to calculate the final value. (1) Zero-growth model VK = FCFK WACC (3) In formula (3), VK is the final value at the end of the strategic planning period of the target enterprise, and FCFK is the cash flow in the k-th year. WACC is the weighted average cost of capital. (2) Steady growth model VK = FCFK+1 WACC g (4) In formula (4), VK is the final value of the target enterprise at the end of the strategic planning period, FCFK+1 is the free cash flow in the (K+1) year, and WACC is the weighted average cost of capital.