Research On The Application Of Real Option Method In The Valuation Of High-tech Enterprises

This paper mainly studies the valuation of real options for enterprises.As hightech enterprises have a strong demand for innovation and will make a lot of investment in patent technology reserves,the valuation of patent based intangible assets of hightech enterprises has become a key and difficult point.For the real option method,because it can regard the possession of intangible assets dominated by patents as a right to judge whether to produce and execute products according to the actual situation of the market at some time in the future.It can be considered that the real option method sees the "market value" of intangible assets,so it has more advantages in the valuation of high-tech enterprises than the traditional valuation method that only sees the "book value" of intangible assets.Taking BOE as the research object,this paper analyzes the intangible assets of BOE,and makes a comparative study on the value evaluation of BOE’s intangible assets by using the B-S model method of real options.Using the real option method of B-S model to value BOE,the enterprise value of BOE can be divided into two parts.The first part is the generated value of BOE’s existing assets(excluding intangible assets),and the other part is the enterprise’s potential ability to obtain income,mainly referring to intangible assets such as patents.In the first part,the enterprise value is calculated and evaluated by discounting the more stable cash flow in the future.In the second part,the B-S model method of real option method can be used for calculation and evaluation.The first part calculates the ability of BOE’s existing assets to obtain free cash flow.According to the analysis of free cash flow discount method,combined with the company’s free cash flow in the past few years,predict the company’s cash flow in the next few years,and then determine the discount rate of the company’s future cash flow,so as to obtain the evaluation results of the value of existing assets.The second part uses the B-S model method of real options to estimate and calculate the parameters in the B-S model method,including the price of the right in the initial period,the exercise price of the option,the price of the underlying asset,the validity period of the option,the risk-free return and the volatility of the underlying asset,We will get the value evaluation of BOE’s potential revenue earning ability due to its possession of the 6th generation AMOLED patented technology group.Then add the discounted value of BOE’s ability to obtain free cash flow and the value of potential ability to obtain income to obtain BOE’s enterprise value.Then,this paper compares the enterprise value calculated by the real option method with the enterprise value calculated by the P/E ratio method,which is a traditional valuation method.It can be seen that the real option method is more able to give the correct value evaluation of the intangible assets obtained by the R&D of hightech companies than the P/E ratio method.Finally,this paper analyzes the advantages of investors and enterprise managers using the real option method to evaluate the value of high-tech enterprises.Investors using the real option method can more accurately value the intangible assets of hightech enterprises,but for enterprise managers,It can calculate whether the value brought by the intangible assets obtained from the R&D investment of the high-tech company can make up for the company’s existing R&D investment according to the real option method,and then choose to give up or invest the R&D investment.When scholars used real options to value high-tech enterprises,they often valued the whole company or the invested production line,which can be regarded as the valuation of determined assets,but did not value the intangible assets that may generate cash flow in the future.This paper intends to make up for the defect that the traditional valuation method is difficult to consider the potential profitability of enterprises through the valuation of intangible assets that have not generated cash flow.But at the same time,this paper also has the problem of inaccurate estimation of volatility under BlackScholes Option Pricing method.