Title :
Research on decision making in M&As based on real options
Author :
Zhu, Weidong ; Jin, Ge
Author_Institution :
Res. Center for Knowledge Econ. & Innovation Manage., Hefei Univ. of Technol., Hefei, China
Abstract :
Nowadays, the activities of merger and acquisitions become increasingly frequent, and a successful M&A need to be established on the base of reasonable assessment to the target company´s value. Considering the value of target company in different situations is required in decision making in M&As because of the uncertainty that the value of target company often have. The theory of real options provides a good basis for investment decisions under uncertainty, while the feature of specific investment activities is needed to take into consider. Therefore, it is necessary to improve the option pricing method, such as binary tree model, under the real feature of M&As activities, and analyses the change of the value of target company over time and the corresponding tactics that the acquiring corporation should take.
Keywords :
corporate acquisitions; decision making; investment; pricing; trees (mathematics); value engineering; M and A activities; binary tree model; decision making; investment decision; merger and acquisition; option pricing method; target company value; Binary trees; Companies; Economics; Fluctuations; Investments; Pricing; binary tree model; investment decisions; merger and acquisition; real option;
Conference_Titel :
Computer Science and Service System (CSSS), 2011 International Conference on
Conference_Location :
Nanjing
Print_ISBN :
978-1-4244-9762-1
DOI :
10.1109/CSSS.2011.5974843