Price-earnings ratio method: according to the profitability of the acquired company, determine a reasonable price-earnings ratio and multiply it by the net profit of the acquired company to get the valuation of the acquired company.
Price-to-book ratio method: divide the net assets of the acquired company by the total number of shares issued to get the net assets per share, and then determine a reasonable price-to-book ratio according to the industry or market average level, and multiply it by the net assets per share of the acquired company to get the valuation of the acquired company.
Cash flow method: according to the cash flow of the acquired company in the next few years, the present value is calculated by discount method, and then the valuation of the acquired company is obtained by adding the two.
Market transaction method: refer to the market transaction price of the same type of enterprises in the same industry, and determine the valuation of the acquired company in combination with its operating and financial conditions.
It should be noted that different valuation methods are applicable to different situations. Choosing a suitable valuation method needs to consider the industry, scale and development stage of the acquired company, and the final valuation result should be a comprehensive valuation obtained by combining various methods. At the same time, for large M&A projects, professional investment banks, lawyers and other institutions need to conduct all-round due diligence to reduce investment risks. For questions about enterprise value or company assets evaluation, you can click on the avatar to ask questions, and you can answer any questions.