Comparative analysis of firm valuation methods activity in mergers and acquisition transactions: A practice accommodation

Disappearence of borders with globalisation has deeply affected the economic systems and enterprises. In this process where fierce competition exists, for enterprises to continue their existence has almost become impossible. The new economic system has made coalitions and acquisitions, also known as mergers, a current issue. These transactions actualised intensively in almost every sector are also seen in the tourism sector. High fixed investment costs, notable capital requirement, sector risk mitigation and competitiveness in accommodation enterprises operating in tourism sector direct investors to merging and acquisition. With regard to the parties, the most important problem in merging and acquisition is the realistic assessment of firm value. While the selling part wishes to sell its enterprise with premium price, the non-selling party wishes to acquire it with a rock bottom price. At this juncture, the most realistic assessment of the firm value looms large. The aim of this study is the value assessment of a non-public accommodation enterprise which merges and acquires. In this context, an accommodation enterprise operating in Alanya has been taken as an example and the disposal value has been assessed using more than one method such as discounted cash flow and economic value added. The data obtained indicates that the firm value gives the same results with either methods and add positive value to the enterprise. Keywords: Firm Valuation, Valuation Methods, Discounted Cash Flow Method, Economic Value Added Method, Mergers and Acquisitions.