There are some quantitative methods for company valuation, but some qualitative factors should be considered in the operation process. Traditional financial analysis only provides valuation reference and determines the possible range of company valuation. According to the market and company situation, the following valuation methods are widely used:
1. comparable company law
First of all, we should choose listed companies that are comparable or referential to non-listed companies in the same industry, calculate the main financial ratios according to the stock prices and financial data of similar companies, and then use these ratios as market price multipliers to infer the value of the target company, such as P/E (price/profit ratio) and P/S method (price/sales amount).
At present, in the domestic venture capital (VC) market, the P/E ratio method is a commonly used valuation method. There are two kinds of P/E ratios of listed companies:
The trailing P/E ratio is the current market value/the company's profit in the last fiscal year (or the profit in the previous 12 months).
Forward P/E ratio is the current market value/the company's profit in the current fiscal year (or the profit in the future 12 months).
Investors invest in the future of a company and give the current price for the company's future operating ability, so the price-earnings ratio method is used to evaluate it as follows:
Company value = forecast price-earnings ratio × company's future earnings 12 months.
The company's profit in the next 12 months can be estimated by the company's financial forecast, so the problem of valuation is how to determine the forecast price-earnings ratio. Generally speaking, the forecast P/E ratio is a discount of the historical P/E ratio. For example, the average historical price-earnings ratio of an industry on Nasdaq is 40, so it is predicted.
The measured P/E ratio is around 30. For unlisted companies of the same industry and scale, the reference forecast P/E ratio needs to be discounted again, which is about 15-20. For small start-up companies in the same industry, the reference forecast P/E ratio needs to be discounted again, which is 7- 10. This means that the current domestic mainstream foreign VC investment is roughly a multiple of the price-earnings ratio of enterprise valuation.
For example:
If a company predicts a profit of $654.38+$00,000 in the second year after financing, then the company's valuation is roughly $7654.38+$00,000. If investors invest $2 million, the company will sell about 20%-35% of the shares.
For companies with income but no profit, the P/E ratio is meaningless. For example, many start-ups can't achieve positive forecast profits for many years, so they can use the P/S method for valuation, and the general method is the same as the P/E method.
2. Comparable transaction method
Choose companies that are in the same industry as startups and have made investments and acquisitions at an appropriate time before valuation. Based on the pricing basis of financing or M&A transaction, useful financial or non-financial data are obtained, and some corresponding financing price multipliers are calculated, so as to evaluate the target company.
For example:
A company has just obtained financing, and B company is the same as A company in business field, and its business scale (such as income) is twice that of A company, so the investor's valuation of B company should be about twice that of A company. For example, Focus Media merges frame media and crowd media respectively, on the one hand, based on the market parameters of Focus, on the other hand, the valuation of the frame can also be used as the basis for crowd valuation.
Comparable transaction method does not analyze market value, but only counts the average premium level of financing M&A price of similar companies, and then uses this premium level to calculate the value of the target company.
3. Discounted cash flow
This is a relatively mature valuation method. By forecasting the company's future free cash flow and capital cost, the company's future free cash flow is discounted, and the company value is the present value of future cash flow. The calculation formula is as follows:
Company value
Where: n is the life of the asset; ?
CFt is the cash flow of T year; ?
R is the discount rate including the expected cash flow risk. Save?
Discount rate is the most effective way to deal with forecasting risk, because the forecast cash flow of start-up companies has great uncertainty and its discount rate is much higher than that of mature companies. The capital cost of seeking seed capital for start-ups may be between 50%- 100%, and early start-ups are open.
The company's capital cost is 40%-60%, and the later startup company's capital cost is 30%-50%. In contrast, the capital cost of companies with mature operating records is between 10%-25%.
This method is more suitable for mature private companies or listed companies, such as Carlyle's acquisition of Xugong Group.
4. Asset law?
The asset law assumes that prudent investors will not pay a higher price than the acquisition cost of an asset attack with the same utility as the target company. For example, CNOOC bid for Unocal and valued the company according to its oil reserves.
This method gives the most realistic data, usually based on the funds spent on the company's development. Its deficiency lies in the assumption that the value is equal to the funds used, and investors have not considered all the intangible values related to the company's operation. In addition, the asset law does not consider the value of future predicted economic benefits. Therefore, the valuation of the company by the asset method has a positive result.