Blackstone Co., Ltd. Shareholders’ Equity Value Assessment Based On DCF Method

With the gradual introduction of relevant laws and regulations, valuation businessin the modern economy began to play an increasing important role, especially forcompany listing, mergers and asset appraisal business for the purpose of financialstatements. These are making importance of evaluation to be reflected.Intrinsic value is nether the simple addition of the assets nor measure of short-termprofitability, but the going concern assumption reflects the industry outlook, futurecausal relationship between strategic planning and investment income for theenterprise decision-making and rational investment to provide guidance and direction.At first, this thesis summarizes the research on the assessment of enterprise value athome and abroad.Then according to classic value assessment theory, it analyzes andcompares four main valuation methods. It chooses discounted free cash flow method（DCF） for valuation of the Blackstone Co., Ltd considering the situation, valuedrivers and the parameters available to get. This company are required real data, stableindustry position and cash flow and easy to measure market risk. Especially whenselecting the proper method, this thesis analyzes from the point of view of valuedrivers applicability of the various methods and certain the reflection of the main valuewhen using DCF method. DCF model is set up based on the characteristics ofenterprises. After making an assay of the industry, status and the macroeconomicenvironment of Blackstone Co., and combining the historical data, author predicted thefuture operating conditions and turned this prediction into free cash flow. Meanwhileaccording to the industry data extraction of similar listed companies, author gets thebeta value through linear regression analysis. Then using the revised capital assetpricing model author calculated the weighted cost of capital, plus the spilled net assetsvalue and excludes interest-bearing debt, then ultimately calculate the equity value ofall the shareholders of the Company. In this paper, the reasons of value adding and thefactors of leading to deviations from the true value during the valuation process areanalyzed. Finally, the calculation of the weighted average cost of capital and thesensitivity of the main business revenue growth help to identify the key factors thataffect the enterprise value of shareholders’ equity. This conclusion is useful forbusiness operators and owners to make the direction of company for shareholderreturns’ development.