Empirical Analysis On Enterprise Valuation In The Private Equity Investments

Private equity investment has been implemented for a long time in foreign country, and it plays a crucial role in promoting industrial development and social progress, with the rapid development of China’s economy, the domestic private equity fund assets under management are also growing rapidly. This paper introduces the theory of private equity investment, operational flow of private equity investments, investment tools and common commercial terms, and focuses on valuation methods. In the case of A company, the author adopts the methods of quantitative analysis and qualitative analysis, firstly, introduces the terms of investment, and then from the electricity supplier industry pharmaceutical enterprises analysis angle scale analysis of the target enterprise investment value, finally focus on the use of comparable company method and the discounted cash flow method (DCF) on enterprise valuation. The main conclusion of this paper is that, as the entire pharmaceutical industry is in high speed development and the integration of the restructuring phase, P/E ratio and cash flow discount method is more suitable for the private equity investment in the pharmaceutical industry enterprises. In this paper, the author adopts P/E ratio and cash flow discount method to quantitative analysis and forecast of the case, through the comparison of the two methods, the valuation is close to and higher than the transaction price which is through negotiations by investors, investors have a certain margin of safety, so investors accordingly it make investment decisions at last. Through this article, this paper gives some suggestions on the application of the enterprise value evaluation method in the pharmaceutical industry.