A Study On Valuation Methods Of Small And Medium-sized S&T Enterprises Based On Venture Capital

Scientific and technological enterprise plays a particularly significant role in the development of national economy. Venture capital is the principle resource of the funds required at the start-up stage of scientific and technological enterprise. The cruxes of the matter, small and medium-sized S&T enterprise’s financing difficulty, can be concluded into two, the first is the high-risk of the growth period, and the second is that there has not been a ready-made series of theory, method and mode to estimate the small and medium-sized S&T enterprise value. Generally speaking, the main ways for venture capital to withdraw include IPO, mergers and acquisitions, repurchase and liquidation. Most companies choose the way of M&A, repurchase or liquidation to withdraw. No matter which way does the company choose to withdraw, the core issue is how to estimate the small and medium-sized S&T enterprise value. If the companies want to be infused capital and management without a hitch at the start-up stage, which can keep the companies developing smoothly, there is no other than to estimate the companies’value fairly and precisely. That is to say, fair valuation can let the investors fully understand the potential risk and benefits in the venture investment, so it is possible to infuse the capital or to withdraw successfully. How to estimate the small and medium-sized S&T enterprise value, meanwhile whether the traditional theory of valuation can be applied to such enterprises, is an innovative asset pricing issue worthy to probe.Therefore, this thesis mainly discusses two questions:(1) Whether the traditional theory of valuation can be applied to the small and medium-sized S&T enterprises invested by venture capital. What is the limitation of the traditional theory of valuation under this circumstance. (2) How can the model of estimating the value be properly improved and innovated into a more suitable one for the small and medium-sized S&T enterprises? In allusion to the first question, the thesis initially analyzes the thought foundation and the system of the asset pricing theory, which illuminates the theoretical basis of the asset pricing theory and model. Secondly, this thesis analyzes the technologically economic process of the small and medium-sized S&T enterprises, in order to make a point and verify that the unsystematic risk premium is the key factor affecting the value of enterprise, meanwhile makes a comparison with the behavior of venture investment, industrial investment and portfolio investment, designed to indicate the limitation of the traditional asset pricing theory under the circumstance of venture capital. Contra posing to the second one, on the basis of the first, this portion studies on the main practice experience of the international and domestic venture capital, learns from it and adopts the methods of predicting future cash flows by backtracking calculation and bringing the unsystematic risk into discount rate. This part promotes the model of discounting the cash flow and proposes an innovative thinking. Finally, in consideration of time and the limitation of theoretical level, this thesis puts forward the shortcomings and some directions remained to be studied.