The Optimization Research Of Comparable Companies' Selection In Enterprise Valuation

Market approach is one of the three methods of enterprise valuation.Due to its ease of use,the market approach are widely used in the United States and other developed capital market.In China,the application of market approach is relatively small,the practitioners and appraisal report users acceptance of the market approach is relatively poor,this suggests that market approach in our country still exist certain problems in the process of application.This paper argues that one of the important issues in the market operation method is relatively rough,during the assessment process,especially the selection of comparable companies is too subjective,comparable companies choose mostly based on the practitioner's own judgment,lack of objective selection result verification,which led to the market approach valuation result is difficult to achieve objective and reasonable.In order to solve this problem,this paper introduces the high dimensional data similarity measurement technology into the comparable company selection,and uses the mathematical ways to enhance the objectivity of the comparable company selection.Based on the study of the traditional similarity measure method and the high dimensional similarity measure method,this paper constructs the improved comparable company selection model-the Esim model based on the actual situation,and builds up the index system based on the choice of comparable companies.Based on "Central China Land Media" as an example,this paper use the improved Esim model in search of its most similar comparable companies,and through the industrial chain,product,financial indicators three angles to verify the effectiveness of the selected comparable companies.The case study shows that the improved Esim model based on the high dimensional data similarity measurement technology can effectively select the comparable companies which are most similar to the enterprises being evaluated,so as to enhance the objectivity and rationality of the comparable companies' selection.