Improvement of Discounted Cash Flow Theory in Mergers and Acquisitions Based on Games

The result of value appraisal decides whether an enterprise acquires target or not. Discounted Cash Flow is a theoretical, widely applied method of value appraisal. However, it predicts cash flow by linear model, static appraisal and ignores integration cost. This paper tries to amend the flaws through combining games and Discounted Cash Flow method, considering integration cost. The amendment optimizes Discounted Cash Flow method, increases its practicability and science. Its improvement is available to reduce the risk of value appraisal and complete integration successfully.