Research on pricing risks control of merger and acquisition based on game theory

The target firms pricing process is divided into objective value assessment, value-added measure of merger and acquisition (M&A), pricing interval estimation and game pricing four parts. The paper points out that the main risks come from incorrect value assessment of target firm and information dissymmetry between the buyer and the seller. So the paper adopted two levels of dynamic risk control strategies. First, control the target enterprise valuation assessment risk through diligence investigation and reasonable choice of parameters; Second, control the information dissymmetrical risk in price negotiations by establishing game negotiations model. The model uses game theory to study the negotiation ideas of both sides and pricing tactics under asymmetric information conditions. The optimal judgments and tactics combinations are given by Bayesian Nash equilibrium when the pricing right is in different negotiatorpsilas hands. Finally, the game negotiation model is applied to the case of Tai Ji Group buying South-west Pharmacy, and explains the reasons why Tai Ji Group refused the first quoted price and accepted the second quoted price. The case proves the effectiveness of theories and methods put forward by this paper.