Evaluation Methods and Market Concentration

Ralf Bebenroth

Chapter 10 in International Business Mergers and Acquisitions in Japan, 2015, pp 139-152 from Springer

Abstract: Abstract This chapter discusses methods of evaluation of firms; in simple terms, how to determine the price of a target firm. It will be shown that several methods exist such as the book value method, the market value method and the discounted cash flow value method. It will be seen that the market value method is the most popular to use and the discounted cash flow value method is the scientifically most rigorous one to determine the price of a Japanese target firm. As a secondary topic, market concentration will also be discussed in this chapter. This concerns bigger acquisitions, in which the acquisition will restrain competition because of too much market power. In the case of these “big” acquisitions, the Japanese Fair Trade Commission may prohibit deals from being completed. The mathematical approach of how to define whether a deal will lead to market concentration is the Herfindahl Index, which will also be introduced.

Keywords: Cash Flow; Institutional Investor; Market Concentration; Japanese Firm; Target Firm (search for similar items in EconPapers)
Date: 2015
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DOI: 10.1007/978-4-431-54989-5_10

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