Research On The Evaluation And Decision Of Private Equity Invest Project Selection

With the continuous development of China’s private equity industry. PE not only solves the financing problem for SMEs to provide new ideas, but also inject vitality for the management of SMEs. In Europe and other developed countries, the private equity investment is a mature industry, which has become the important financing methods besides the banks and IPO.Although China’s private equity industry has been a rapid development, but still at an initial stage. In order to play the private equity investment to promote economic growth in China, as well as to private equity investment to the development of their own better, the right choice for private investment projects is an important research topic of research institutions.In order to provide the theoretical basis of a reference to the scientific assessment and decision-making of private equity investment institutions, the article, which combined the game theory and option theory and started multi-stage of PE investment, discussed the evaluation and decision of PE invest project selection. The article firstly construct the project evaluation and decision-making index system and explains the focusing of the evaluation in various stages, And then analyses the principle and imitations of traditional and modern project decision-making methods.Combined with multi-stage and long-period characteristics of PE invest project. the article introduced the multi-stage, multi-state trigeminal tree compound option and established a new private equity investment project selection evaluation and decision-making model. The new model evaluated the option value and the true value of the project, which hidden in the full investment cycle of private equity.On the basis of the trigeminal tree compound option value, the article analyzes the real situation that the private investment company does not know the real value of the company, in order to obtain investment, send a good quality to attract investors’ signal. PE judge the true value of the signals issued by the enterprise based on the probability. Taking into account the case of asymmetric information, the article introduced incomplete information dynamic game model and calculated perfect Bayesian equilibrium solution of model.In the end of article, a real case simulates the model analysis of the options game. Calculated cases of trigeminal tree option value, and use the refined Bayesian tree balanced solution to calculate the proportion of equity.