Research On Evaluation Of Private Equity Investment Project

Private equity investment funds are mostly in the start-up of high-tech enterprises.These enterprises which are characterized by the largest equity is not mobile,or of poor liquidity,and the enterprise's products did not achieve a large-scale of production.Such enterprises investment generally have more high growth potential,so after the withdrawal of private equity investment funds they usually get more lucrative benefits.At the same time,in the early stages of development of enterprises because its products in the future market are of uncertainty,or the core competitiveness of enterprises in the future competitive environment are of uncertainty,so to invest these private equity investment funds in such enterprises will be accompanied by a higher risk.Private equity investment funds are originated from the United States,followed by the scale of financing and the number of investment enterprises having been rapidly developed.The data shows that the total investment in private equity investment funds in 2016 has exceeded the total investment of public funds,which has became an important financing path following commercial banks and commercial enterprises listed on the board(IPO).From the development process of China's private equity investment funds,we mainly go through three stages:the start stage,rapid development period and regulate the three stages of supervision.From the principle of private equity investment,we can summary that the private equity investment have following characteristics:a higher risk brought by the non-liquidity of the ownership of the equity of invested companies and the asymmetry information between the fund and invested companies,as well as the fund invested longer time.From the operation process of private equity investment,the evaluation and decision-making process of the investment enterprise is the core link of the fund's overall operational risk and profit.But in the practical work experience,it is found that the audit process in the current domestic private equity investment fund is lack of scientificity,usually used by the fund manager based on a wealth of experience in the project to conduct subjective judgments.In the evaluation process,it is lack of a systematic and objective evaluation methods and means of analysis.This thesis topic is based on the background that domestic private equity investment develops rapidly but the evaluation and decision-making process of the investment enterprises are not so scientific.This paper attempts to applied the basic research idea which combined qualitative with quantitative analysis to the study of private equity investment.In this paper,a logistic regression model based on principal component analysis(PCA)is used to study the evaluation of private equity investment projects.19 evaluation indexes which are from 7 classification factors are selected to comprehensively reflect the overall operation of the project enterprises.In addition,in consideration that the influence to the enterprises management and development in different industries is not comparable,this paper selects 45 sample enterprises from 9 basic industries,and the industry average was used as the benchmark to make the analysis of this paper widely applicable.Based on the empirical analysis of the indexes of the sample enterprises,it is found that the most important factors influencing the comprehensive evaluation results of private equity investment are as the following 4 aspects :First,among the various evaluation factors,the industrial factor has the greatest impact on the comprehensive evaluation results of the private equity investment projects,and the industry factor is positively correlated with the comprehensive evaluation results.Second,taking into account the new economic environment facing our country,that is,the economic structural adjustment period,private equity investment in the project evaluation and screening process,should focus on the operating capacity of funded enterprises.And the operational capacity of the enterprise has a positive correlation with the comprehensive evaluation results.The index of the operational capacity evaluation index selected in this paper is the relative inventory turnover rate of the enterprises that have the greatest impact on the comprehensive evaluation results of the invested enterprises.Thirdly,the solvency and asset structure of enterprises are another important factor influencing the comprehensive evaluation level of the invested enterprises.In this paper,we select the relative asset-liability ratio(RMP)and relative liquidity index(S/E)of the sample enterprises to reflect the asset structure and solvency of the invested enterprises.The results show that the comprehensive evaluation level of the invested enterprises is negatively correlated with the relative asset-liability ratio index,but the positive correlation coefficient is positively correlated with the relative liquidity ratio index.Fourth,another important factor influencing the level of comprehensive evaluation of private equity investment enterprises is the profitability of the invested enterprises.In this paper,the relative sales gross margin level of the invested enterprises is selected as the representative index to measure the profitability of the enterprises.The results show that the comprehensive evaluation level of the invested enterprises is positively correlated with its relative sales gross margin index,Higher gross margin level of the comprehensive evaluation of the results of enterprises is higher than the level of the lower margin of the funded enterprises.Based on the above conclusions,the private equity investment fund should focus on the impact of the above four factors on the invested enterprises in the process of comprehensive evaluation of the project enterprises and compare the results of the comprehensive evaluation of the invested enterprises.Finally,the investment fund can choose the best companies to invest.