Cloud model of strategic M&A pricing based on real option method

The current Black-Scholes option pricing model is based on the assumption that prices of assets such as stocks subject to ITO (continuous Markov process). However, the value of assets for project may not always meet this assumption. Therefore there is subjectivity and arbitrariness. Cloud model can reflect the associative characteristics of fuzziness and randomness. The reverse cloud generator algorithm based on interval data can express the randomness of the intervals, which estimated by experts and provide the numerical features of cloud formation objectively in the process of generating cloud formation model. In this paper, we applied the option pricing theory-based normal cloud model and interval analysis the normal reverse combining interval analysis and the algorithm of reverse cloud model to offer a reasonable estimate of the strategic mergers and acquisitions pricing. At the end, a example is given to simulate verification of the model.