Pricing risk measurement in M&A valuation

Valuation of target companies in merges and acquisitions is a complicated issue which contains potential pricing risk. In order to precisely measure the pricing risk of M&A valuation, hence to minimize the chance of M&A failure, a rough model of pricing risk measurement is set up in this paper. By dividing the estimated acquisition price into several interval, using corresponding shareholding ratio to calculate pricing risk, the pricing risk measurement model can be applied to estimate the pricing risk in M&A. Here in this article, empirical research based on a case analysis shows that lower pricing risk proved the purchase price to be more reasonable and good for M&A business.