Valuation and timing of mergers and acquisitions: a real options approach.

Summary This thesis is interested in showing the conceptual and empirical interest of the option approach to the valuation and timing of M&A projects. To do so, we first mobilized a large literature on mergers and acquisitions and the real options related to them. Noting the lack of empirical contributions to this literature, we proceeded to conduct two empirical studies. The first is an exploratory qualitative study conducted with M&A experts. The results of this study allowed us to study in depth the particularities of the evaluation and timing of mergers and acquisitions and to identify new categories of real options present in the different phases of the evaluation process and in the moments of choice of timing. These options were then classified into strategic growth options and flexibility options. Once the options were identified, we moved on to our second empirical study, which is a real case study. This study aims, based on a real merger-acquisition project, to clarify the valuation and timing issues when the acquirer uses traditional valuation techniques such as the Net Present Value. The limitations of these methods lead us to propose solutions for a better approach to the valuation and timing of mergers and acquisitions under uncertainty: the real options method. To do so, we propose to evaluate the acquisition opportunity and to study the timing of its conclusion using the simple option methodology. Three valuation methods are then adopted: the continuous time valuation model (Black and Scholes), the discrete time model (binomial trees) and the Monte Carlo simulation technique. The second solution proposed is the approach to the valuation and timing of mergers and acquisitions by the multi-sequential compound option methodology. For this purpose, we mobilize the binomial model adapted by Mun (2010) and propose a customized modeling in Visual Basic of the option sequences related to the valuation process and the timing choice.