Advertisement

Evaluation Methods and Market Concentration

  • Ralf Bebenroth
Chapter

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 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

References

  1. Abeam (2010) bijinesu due diligence no jimu. Business of due diligence, 2nd edn. Abeam M & A Consulting, Chuo KeizaiGoogle Scholar
  2. Bainbridge SM (2012) Mergers and acquisitions, 3nd edition, Thomson Reuters, New York USA ISBN 978-1-60930-132-3Google Scholar
  3. Company Brochure (2012) Nippon Steel & Sumitomo Metal Corporation. http://www.nssmc.com/en/company/pdf/nssmc_brochure_en.pdf. Accessed 18 June 2013
  4. Ernst and Young (2013) Global steel 2013: a new world, a new strategy. http://www.ey.com/Publication/vwLUAssets/Global_steel_2013/$FILE/Global_Steel_Report_India_conference_Feb_2013.pdf. Accessed 18 June 2013
  5. Ezaki S, Hara A, Moussis V (2009) Japan: merger control. The Asia-Pacific Antitrust Review 2009. Anderson Mori and TomotsuneGoogle Scholar
  6. Fenton K (2008) Mergers and acquisitions. Understanding the Antitrust Issues, 3rd edn. American Bar Association, Sect. Antitrust Law, Chicago, February IssueGoogle Scholar
  7. Fuchibe Y (2013) Chiteki zaisan Dyuu diligence no jitsumu [Practice of Due Diligence on intellectual property], 2nd edn. Chuuou KeizaishaGoogle Scholar
  8. Hasegawa T (2007) Baishu Boei to M & A hanrei shuu. Casebook on M & A and Defense of Corporation. LexisNexis JapanGoogle Scholar
  9. Higgins NH (2013) Do stock-for-stock merger acquirers manage earnings? Evidence from Japan. J Acc Public Policy 32:44–70CrossRefGoogle Scholar
  10. Igaki T, Yamaguchi Y (2011) Japan. In: Campbell D (ed) Mergers and Acquisitions in North America, Latin America, Asia and the Pacific Selected Issues and Jurisdictions, Center for International Legal Studies. Wolter, Kluwer, pp 359–393CrossRefGoogle Scholar
  11. Inoue K (2010) Do M&A in Japan increase shareholder value. In: Kurokawa Y (ed) M&A for value creation in Japan, monden institute of management. Jpn Manage Int Studies 6:117 -132Google Scholar
  12. Inoue Y (2012) Nippon Steel & Sumitomo eyes more cost cuts as debuts in weak market, Reuters, http://www.reuters.com/article/2012/09/30/nipponsteelsumitomo-merger-idUSL4E8KO60520120930. Accessed 18 June 2013
  13. Kanashima H (2012) Sour ties hurt Japan’s exports to China, Asia one, The Yomiuri Shimbun. http://news.asiaone.com/A1Business/News/Story/A1Story20121217-389944.html. Accessed 18 June 2013
  14. Kobayashi I (2013) Kaigai M & A ni yaku datsu. Guro-baru senryaku no kandokoro. Usefulness of foreign M & A. Point of global Strategy. Chuo keizai shaGoogle Scholar
  15. Kojima A (2005) Merger control in Japan: its history, realities, and future. Deputy Secretary General for Economic Affairs. Fair Trade Commission of JapanGoogle Scholar
  16. Kyodo News (4 February 2011) Huge steel merger planned for 2012. The Japan Times Online, http://www.japantimes.co.jp/text/nb20110204a1.html. Accessed 18 June 2013
  17. Kyodo News (15 December 2012) FTC gives steel giants approval for merger, The Japan Times Online, http://www.japantimes.co.jp/text/nb20111215a9.html. Accessed 18 June 2013
  18. Lok J (2010) Institutional logics as identity projects. Acad Manage J 53(6):1305–1335CrossRefGoogle Scholar
  19. Moody’s (2014) Moodies Japan, Shintetsu sumitomo to JFE henkou. [Moody’s Japan, Nippon Steel Sumitomo Metals and JFE Change]. Nikkei Shinbun, Febr 19th, p 15Google Scholar
  20. Nikkei (2014) Shinnitetsu sumitomo shachou ni shindo shi [Newly appointed president of Nippon Steel is Mr. Shindo.] Nihon Keizai Shinbun, Jan. 16th p. 1 (Nikkei (Jan. 16th) Shinnitetsu sumitomo shachou ni shindo shi. [Mr. Shindo Newly Appointed President of Nippon Steel]. Nihon Keizai Shinbun, Jan. 16th p 1)Google Scholar
  21. Nonaka K (2013) M & A no jimu roudou kanri (Personnel Management of M & A). Chuo KeizaiGoogle Scholar
  22. Ota Y (2013) M & A kigyou soshiki saihen no suki-mu to zeimu (Organizational reorganization at M & A and Tax.), 2nd edn. Omura Zaimu KyoukaiGoogle Scholar
  23. Sugimoto T (2014) Shinnitetsu juukin, beikouryaku he shuunen, [Japan Steel Sumitomo Metal and Obsession for American Strategy]. Business Today, Nikkei May 2nd p 13Google Scholar
  24. Whittington M, Bates K (2007) M & A as success. In: Angwin D (ed) Mergers and acquisitions. Blackwell Publishing, Oxford, pp 27–62Google Scholar
  25. Yulisman L (2012) Nippon Steel sets up joint venture with local firms, The Jakarta Post, http://www.thejakartapost.com/news/2011/11/04/nippon-steel-sets-joint-venture-with-local-firms.html. Accessed 18 June 2013

Copyright information

© Springer Japan 2015

Authors and Affiliations

  1. 1.Kobe University Research Institute for Economics & Business Administration (RIEB)KobeJapan

Personalised recommendations