Abstract
As for the mergers and acquisitions (M & A) in the pharmaceutical industry, the patent technology is one of the core values of the enterprise. However, according to the international evaluation criteria, but there are differences over the valuation strategies on the patent technology. Currently, the valuation methods used in the market are mainly cost method, market method and income method. When it comes to the uncertainty and continuity of the M & A, the real option theory can correct the valuation by late adjustment. This paper tends to interpret the real option theory through the simulation of BSM model and binary tree model, and to interpret the application of the gambling agreement to the actual operation of M & A.
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