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Financial analysis and risk of enterprise merger measure

Author: HuangHuiPing From: www.yourpaper.net Posted: 2010-06-06 04:32:08 Read:

Abstract: enterprise merger as a kind of investment behavior, its goal is to seek the maximum profit, earnings per share maximization, the maximization of enterprise value, enterprise merger and acquisition activity not only to consider the feasibility of the operation, more attention should be paid to the rationality of economy.In order to minimize the risk of merger or avoid paying too high a price for an attractive company, must be careful and analysis of financial evaluation.Financial evaluation of enterprise, it can be initially confirmed the acquisition target enterprise in M & A, and risk prediction, evaluation and control is to reduce the cost of mergers and acquisitions, M & a key to success.At the same time, in order to increase the probability of success of M & A, the application of collaborative value method is necessary for financial analysis.
Keywords: the financial evaluation; financial analysis; risk assessment; Collaborative Value

M & A is the main way of enterprise seeking expansion through the capital market, mergers and acquisitions implementation often driven by short-term or long-term interest motivation, but also the unity of the whole and the reorganization of the enterprise after acquisition and implementation of new strategy.Company merger and acquisition is a complicated and contains high risk business, it can not only open innovation as the M & a starting point, may also make the dilemma: as much as expected merger integration after M & A, such as the lack of.Mergers and acquisitions as a kind of investment behavior, its goal is to seek the maximum profit, earnings per share maximization, the maximization of enterprise value, the symbol of its success is the M & a value of more than before the acquisition value.In order to minimize the risk of merger or avoid paying too high a price for an attractive company, it is necessary to analyze the financial evaluation, careful.In the acquisition to mergers and acquisitions business value according to the appropriate method, find the right price, looking for prices, are creative and time-consuming effort of both parties.In the enterprise merger and acquisition, the value assessment of the target enterprise is the essence of the M & a transaction, the key for every successful merger lies in how to determine the value of coordination can produce in mergers and acquisitions, it determines the upper limit price offer.Therefore, find a proper method to calculate the synergy value, the merger between the parties, are very important.This paper uses the FCFF method, by the appropriate adjustment of the indicators, synergy value calculated in the merger.
Financial evaluation of
, M & A
1, financial analysis of
the buyer shall determine the target enterprises provided whether the financial report accurately reflect the financial situation of the enterprise, through other information on assets, liabilities and provide the review, analysis of the financial situation of the company.Including: (1) the analysis of profitability.In the profit table, one by one from the income deduct the cost, taxes can be obtained after the net profit, many deductions can reflect the different economic information enterprises.(2) the capital structure.Short-term liabilities, long-term liabilities and owner's equity share reflects the long-term development ability of enterprises to survive.M & A enterprises from the target capital structure of enterprise, to determine its ability to resist risks and financing ability.(3) asset liquidity.This index reflects the enterprise short-term debt-paying ability level of liquidity, the target enterprise, can analyze the possibility of entering the market for financing, for the purpose of M & A, especially should analyze the liquidity target number of enterprises and the liquidity of assets and other financial indicators, the ability to resist risk evaluation of enterprise.
2, decision analysis and
Decision analysis can refer to the following indicators: (1) earnings per share.That change in earnings per share ability, it is the ultimate embodiment of the enterprises merger.In the initial acquisition, earnings per share more often than before the acquisition has declined, but through the development of a new development strategy to target enterprises, increase the pace of development, should gradually increase profitability.(2) the market price.The market price is the comprehensive reflection of enterprise's profit ability, operation ability, development prospects, the market higher, M & M & a need more funding, at the same time is the exchange rate basis, also can determine the potential value of the target enterprise bid higher than market price.
measure of two, enterprise merger risk
A measure of enterprise merger risk investment decision is to determine the basis risk and discount rate, because the enterprise merger and acquisition process is complex, involving a wide range, the risk prediction, evaluation and control is to reduce the cost of mergers and acquisitions, M & a key to success.Methods to measure the risk capital budget acquisition risk analysis method, application of standard deviation and the capital asset pricing model (CAPM).
1, the risk of purchasing capital budget analysis
The acquisition of venture capital budget analysis method to measure the feasibility, through the establishment of indicators to determine the acquisition, especially in cross-border acquisitions, the after-tax cash to compute a measure of their own money to flow from the buyers point of view, can affect the analysis of the original investment, the cash flow and residual value and other factors on the acquisition of the net present value of the.The general formula for the:

In the formula: NPAFA is the net present value of M & A; IFA is the initial investment, including the equivalent local currency funds and foreign currency borrowing funds for the national currency; KFA is the required rate of return; CFFA t period of acquired significant cash flow, namely the after-tax cash actual flow.Deduct a percentage to the subsidiary company for future operation of the part, according to the exchange rate after the deduction of cash flow; SVFA is meaningful to the acquisition of the residuals, the merged enterprise foreign markets expected value and asset sale expected exchange rate; for the period T; n for project life expectancy.Factors related to the expected return, including risk-free interest rate and risk management, in the other conditions are the same, the more they low, enterprise market value is higher, the risk from the uncertain factors affecting the operating cost and value: the cash flow, each period of stay in foreign cash flow ratio, each period the exchange rate, the future market value, the sale of the enterprise level of exchange rate.
Transnational merger and acquisition in China in different enterprises will produce different acquisition risk, which affects the M & A activities of the expected rate of return.Equity and debt of domestic costs by domestic risk-free interest rate effect, and the risk-free interest rate affect the cost of borrowing money abroad, when foreign capital cost is low, the implementation of cross-border mergers and acquisitions may be appropriate to use foreign capital.
2, application of standard deviation method
According to the calculation formula of risk and return, in the return rate risk coordinates to return risk indifference curves, plus the minimum rate of return and risk capacity constraints, find out the feasible region pay a risk.
3, the capital asset pricing model (CAPM) and
In this model, system risk securities prices as a measurement tool, through the company now asset contribution with the company's future investment opportunity value to evaluate the value of the company, in a fully diversified portfolio, exists equilibrium relationship between risk and required assets yields in order to obtain the required return rate to determine the risk under the condition of the company value.
three, M & a financial analysis of
This paper analyzes value method of collaborative applications, called collaborative value is refers to the enterprise after the merger performance of the net present value of cash flow generated by the.Collaborative value comes from the synergistic effect.Synergistic effect are the two things together, play the combined effect is more than two of the sum of the simple things.Speaking of the enterprise, the enterprise after the merger, each field of old and new products, new and old business, production management and marketing, such as inherently linked, there is the sharing of resources, can promote each other, play a synergistic effect.Can usually be synergies from cost savings, income improvement, process improvement, financial planning and tax benefits and other five kinds of forms to consider.
1, the value of coordination from
(1) the cost saving.This is the synergistic effect of the most common and most predictable, often referred to as "strong synergistic effect", namely the effect of the maximum possible.Usually, it originates from the enterprise after the merger to reduce unnecessary work, machine equipment and related expenses and the scale economy effect.When the target enterprises and the enterprises in the same country, in the same industry, cost saving space is great.(2) revenue.Sometimes the bidder and target can be obtained by merging the individual enterprise is higher sales growth rate.But because the income promotion includes exogenous variables many management cannot control, so it is very difficult to forecast.(3) process improvement.Reduce the repeated construction and procurement volume can save the cost, the enterprise complementary advantages can improve the income, and through the management to achieve the transfer of enterprises operation and advanced core technology between enterprises.Transfer of advanced business operation mode can be two-way, M & A can as a target is excellent
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