Abstract
This study looks into the reasons behind frequent acquisitions in EDA industry and analyzes acquisition price of SpringSoft by Synopsys. EDA stands for Electronic Design Automation. Three industry features are concluded to explain the frequent acquisitions, including innovation is the basic element to survive, high demand on intelligent human capital, and high market development cost. For acquisition price analysis, two of the most common valuation approaches, Comparable Company Approach and Discounted Cash Flow Approach, were applied to generate the reasonable range of per share equity value. This study found that Discounted Cash Flow Approach reflects the forward-looking expectation of the acquirers. With the addition of sensitive analysis, Discounted Cash Flow Approach provides a flexible and reasonable range where the executed acquition price falls into. It is concluded that Discounted Cash Flow Approach is a practical way to evaluate the subject company under acquisitions.