Enterprise Value Evaluation Methods And Parameters

We discuss the business valuation in biotechnology industry from qualitative analysis and quantitative way. From the financial method, the value of a company is measured by it's future discounted cash flow. And from the strategic way, the value is scaled by the ability to get cash flow in the long future. Furthermore, the competitive ability and monopoly advantage drivers the value in the end.From the qualitative analysis, industry analysis is important in business valuation. To value a biotech firm accurately, one should analysis key industry information, economic data, public and private company information, industry research, competitor, risk and benchmarking.The value of a company is affected by key value driver facters. There are different key value drivers in different industry such as in different development stage.Once the valuation process have been taken for a special industrial firm such as biotech, financial indicater must match with non-financial indicater. And in the same way, the cash flow forecasted must be fitful with the key value driver and the inter-value of the company.Biotech is one of the industries with a lot of intangible assets and technological innovations,such us high risk and special technology uncertain. If the company dose not have any commercialised products and just in the early stage, but relies on its research and development pipeline for future profitability, the nomal value approach proves generally to be useless. Risk-adjusted net present value(rNPV) method, real-options method ,etc. may have advantages to assign the value in biotech company. And Royalty rates is also a useful parameter to value R&D projects.In conclusion, Business valuation should develop in special industry way.