The Study In Valuation And Pricing Of Pre-IPO Private Equity Investment

With the deepening of China's multi-level capital market construction and the continuous improvement of the effectiveness of financial markets,the private equity(PE)investment of Pre-IPO enterprise has become the focus of financial practice.Meanwhile,the valuation of PE investment of Pre-IPO enterprise,as the basis of investment decision-making and project evaluation,plays a crucial role in the success of investment.This paper selects the Pre-IPO private equity investment of Caitong Securities as an key case to analyze,and comprehensively restores the investment logic as well as the valuation pricing process of the object case conducted by Silicon Paradise in the second half of 2014.Furthermore,the paper systematically analyses the factors that may affect the valuation of firms.On the basis of the case study,this paper also examines the empirical relationship between the Pre-IPO PE investment valuation and a series of possible factors from the micro level by selecting the enterprises that have gone public on the A-share market between 2016-2018 and conducted private equity investment before listing.A multivariate linear regression analysis was carried out on the impact of financial factors such as the profitability,the growth,the actual time toward IPO,the IPO issue price and the asset quality on the valuation of PE investment before listing.The empirical results show that the valuation of PE investment before listing is significantly positively correlated with the company's profitability,asset quality and IPO issue price,and has a significant negative correlation with the actual time toward IPO.At the same time,this paper systematically combs the non-financial factors affecting the PreIPO PE investment pricing,pointing out that the valuation is also subject to the industry factor of the enterprise,the industry status and competitive advantage of the enterprise,the shareholder background and management team,and the business negotiation as well as relational factors.The research results of this paper are useful for supplementing the literature research on optimizing the valuation of PE investment before listing,and also provide new ideas for PE investors to consider the specific factors and methods in the valuation process of target enterprises.