According to the market and company situation, the following valuation methods are widely used:
1, Comparable Company Law: First, we should select 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).
2. Comparable transaction: This method selects companies that are in the same industry as start-up companies and have made investments and acquisitions in an appropriate period before valuation, obtains useful financial or non-financial data from them according to the pricing basis of financing or M&A transactions, and calculates some corresponding financing price multipliers, so as to evaluate the target company. For example, Company A has just obtained financing, and Company B has the same business field as Company A, and its business scale (such as income) is twice that of Company A, so investors' valuation of Company B should be about twice that of Company A. 3. Discounted cash flow: This is a 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: (where, CFn: annual forecast free cash flow; R: Discount rate or cost of capital) 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. 4. Asset method Asset method: It is assumed that a prudent investor will not pay more than the acquisition cost of assets 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.