Evaluation And Analysis On The Investment Programme Of Acquiring Kelon Company

Between the general capital operation and venture capital operation, there are great differences on the efficient evaluation. In China, systemic theory study and practice have came into being in the general capital operation. On the other hand, to the venture capital operation, it emphasized on the layer of theory study and few example are implemented in practice. Except these two kind capital operation, there is a new kind capital operation emerge in China: it belongs to the field of general capital operation, but it comes with the features of venture capital operation. Here we call it "marginal investment"The first part of the assay introduces the basic situation of haisense group and kelon electrolic, as well as the background of the invesment, In 2002, a company which was in hongkong acquired 20.6 percent of kelon's share, and it became kelon's largest shareholder. Because of the illegal economic conduct made by the former kelon board chairman, at the early May kelon promulgated that it was under the investigation on its violation of the security law. This made most of the manufacturing of the refrigerator and air conditioner stop, seriously affecting the manufacturing and management. The total turnover of kelon is 4,558,000,000 yuan; it downgraded 7.56 percent compared to the same time of 2004. All the shareholders is responsible for 487,000,000 yuan lost,(in2004, the shareholders took 159,000,000yuan of the gain.) Marginal VC belongs to the field of general VC. Because: Investor: based on traditional entrepreneur expanding the traditional tec. and exploring new products, mainly the big or medium sized company. Countermand of the investment: take the capital and interest back according to the conduct The stuff: be familiar with the financial management, not knowing the technology exploring, with low level of feasibility study. The marketing emphasis: Kelon company has its current market and easy to be predicted. However, from the view of points of investment management, method of investment, risk of investment and inspection of investment, the acquisition by Hasense have strong features of risky investment activities: Inspection of investment: the focuse of inspection is the possibility of technology feasibility, and technology innovation and marketing prospect are the key factors to research. Method of investment: adopts the way of stock right to invest, without rembursment risk in case of failure, and the corporate developing prospect is concerned. Investment management: attend to business management and decision-making, and investment management is relatively rigorous. The relationship is integrated both cooperation and development. Therefore, the thesis calls this acquisition investment as edging investment. In the second part of this thesis, the thought of edging investment is to make use of evaluation programme of risky invetment to evaluate common finiance investment projects, including four steps of evaluation: collection of project, select and evaluate the chance of investment; evaluation and transaction negotiation; draw some contracts to include the above contents in accordance with the law's requirements, and sign them by both parties; the funds of investors approaches its position. The third part is the core and emphasis of this article, and its analysis on the detailed content of China risky investment evaluation is based on the generalized theories from internal and external acquisition theories. This thesis mentions the outline of China's enterprise acquisition evaluation divided by stage, and the key factors in different stages.at the first evaluation stage, collects information from all kinds of ways including internal and external of company, and evaluates comparing the business plan of the company. Generally speaking, the investing company evaluates from a lot of aspects including the background and ability of the members, size and potential scale of market, the advance of product and technology, finance plan and profit of investment. At the second stage, the aim is to find out the potential investment risks, and how to overcome those risks. This thesis designs a factors system aimed on China's marginal investment project evaluation and conducted by industrial appraisal, management appraisal and enterpriser, especially starting from financial analysis and evaluation. Then forms the actual SWOT analysis to the acquisited company, and analyzes how to quantify the appraisal. The qcquisited company is divided into four stages: seed stage, starting stage, expanding stage and mature stage. In term of Kelon's second period of pioneering work, the period of Haixin acquisiting Kelon shall be defined as seed stage. The following appraising factors at this stage should be noted: the factor of objective market including market capacity, growth trend, entering barrier, competition status, the factor of product including initiation, technology, industry property protection, the factor of people and management including personal temperament social relationship, R&D ability, systematizing ability. The last part of this thesis introduce in detailed the whole evaluation process of Haixin acqusitting Kelon , show the application of the theory to actual case. Through the case-study of Haixin acquisition of Kelon company, based on the internal and external relevant experiences, this thesis generalizes the key factors of China's marginal investment, study on how to quantify the qualitative appraisal, provide the evaluation thinking ways, try to point out the crucial appraisal content and corresponding evaluation ways for the different stages of acquisite activities in China.Based on the above analysis, this thesis generalizes the research on the evaluation system of China's corporate marginal investment project as below: A.The evaluation of risky marginal investment project is based on the combination of qualitative appraisal and quantitative evaluation, among of which, the appraisal is to analyze and judge the investment opportunities and its risk of the risky investment project, while the evaluation generalizes the economic (quantifying) feasibility of appraisal. B.The emphasis of evaluation of marginal investment project is a integrated combination of key factors such as people, market and management. The appraisal of managers'reputation and moral acts an very important role due to the unconsummated operation and assurance system of China's market. C.During the course of marginal investment activities, the project evaluation emphasis on the evaluation of risky investment project. a.At the seeding and probing stage, evaluation and analysis from all aspects are adopted usually, especially corporation founder's experiences and background and personality, specialty and management ability of business organization, technology's ability and its original, market potential growth. b.At the growing and expanding stage, evaluation lays emphasis mainly on risky company's financial status both in the past and for the time being, management concept and ability of management organization, the competition status in objective market, the potential strength of market growth, and the abilities and advantages of R&D of product's technology. c.At mature stage, evaluation lays emphasis mainly on financial statues, market competitive advantages, and the years, ways and risks of receiving funds. D.Although different methods of evaluation suit for different risky corporations in different stages during the course of evaluation of marginal investment,how to quantify reasonably and efficiently the investment risks is still deliberated for all evaluation methods. The research focal point of this thesis is as follows: According to the ripe operation experience in foreign countries, normal evaluation strategy, decision procedure ,the thesis establish the key factor of influencing the VC success or failure of our country, appraise the reference basis of the VC project; Any VC project can not leave affirmation of invest value and settlement of the share structure finally, so it is focal point and difficult point of the thesis how to determine the nature on appraisal and carry on quantification effectively ; Contrasting different investment valuation methods ,the thesis seek the corresponding valuation according to different stages of the VC project , And carry on the essential exposition to the relevant situations that have already been used tentatively in the real case.