Research On The Valuation Of Start-ups By Private Equity Firms

"Start-up enterprise" often lack of sufficient capital and resources,may still suffer from losses or meager profits,and are faced with problems such as lack of core staff and difficulties in business development.Therefore,the introduction of investors is an important part of the development of start-ups.Investors can not only bring financial support to start-ups,but also many social resources such as business development and network accumulation.However,in the actual investment operation for start-ups,due to insufficient accumulation,lack of experience and lack of theoretical basis,scientific and reasonable judgment or quantitative analysis has not been formed on the operation calculation and fair valuation of start-ups.At the present stage,when start-ups introduce external investors,the capital side and the project side still judge the valuation according to their own experience accumulation,so that differences will easily occur in the negotiations between the two sides,bringing a series of risk and uncertainty factors.Starting from the perspective of a private equity investment company,this paper USES the existing valuation methods,investment history,industry data and public cases at home and abroad for reference to discuss the valuation cases of start-up investment studied by A private equity investment company.On the basis of a large amount of information materials,through systematic method demonstration,case analysis,data analysis and other ways,with practicality and rationality as the ultimate goal,this paper summarizes and proposes the fair valuation method of private equity investment companies for start-ups under the reasonable risk control system.From the perspective of private equity investment company’s evaluation of start-ups,the author makes an in-depth discussion on the commonly used valuation methods such as cost method,market method and income method.Aiming at the cost method,this paper reproduces the game process of both parties involved in investment and financing at that time.For the market method,this paper focuses on the multiple method of price-to-earnings ratio,multiple method of price-to-book ratio and multiple method of price-to-sales ratio,and systematically analyzes the above several common valuation methods with the case of a private equity investment company.In view of the income method,this article emphatically elaborated the income method key place,namely the discount rate consideration.In conclusion,the effectiveness of mainstream methods that can be applied to start-ups has been basically verified.The main contribution of this paper is to put forward the innovation valuation system helps to private-equity firms,when beginning to start-up investment reference for enterprise valuation,facilitate the reasonable scientific valuation,enhances the working efficiency of the investment and financing of both sides,to facilitate the construction of a private equity firm portfolio with the internal risk control system,reduce the cost of investment and financing of communication on valuation issues,promote the smooth implementation of investment activity.