The Study In Valuation Uncertainty Of Private Equity In China

Considering the Private Equity are reluctance to disclose their imformation, this thesis aims to investigate the valuation uncertainty of Private Equity investment, by using the "black box" method that is used to analyze black box in Cybernetics.By analyzing the Private Equity investment cycle, This thesis based on the historical data of the gem listed company, the study of valuation uncertainty in both investment link and exit link was carried out with the method of factor analysis, statistical analysis, illustration, etc. The results are as follows:1. Pre-investment valuation uncertainty is caused by the incompleteness and unstable of black box valuation, for the original valuation scheme does not include the PE as its object of valuation. In fact, the intangible assets of PE has great influence on the growth of the black box valuation. It is a fundamental problem that is not noticed in previous studies. The reason comes from cultural differences between China and the West. It is the investment of intangible assets from PE changes the growth trajectory of black box valuation, which shows different characteristics of valuation.2. The uncertainty of pre-exit valuation is closely related to the uncertainty of exit market. For the income gap is too large, once PE is a failure in the IPO exit, it will exert a large impact on the valuation uncertainty of PE. As the income from each exit market is closely related to transaction costs between markets, it is suggested that a multi-level capital market be built under the design of different transaction cost so as to reduce the exit valuation uncertainty.Finally, three proposals on the above-meantioned problems are put forward:1. The p/e multiples of pre-investment should be moderately lower to avoid valuation uncertainty caused by "upside down" in exit secondary market for the data from the gem listed company indicates that the multiples of p/e ratio used in past PE investment valuation were higher,2. PE should choose different companies to realize its due value as valuation differences exhibited by PE individual ability is not valuation uncertainty representation.3. Regulators should build a multi-level capital market under the design of different transaction cost to reduce the valuation uncertainty eventually.