Valuation Study Of Internet Enterprise

March 2015, Premier Li put forward the plan of "Internet plus". With the advent of the Internet plus era, the pace of development of the Internet industry is also accelerating. Since 1990s, Internet companies listed, mergers and acquisitions, financing and other economic activities continue to emerge. How to evaluate the value of Internet companies objectively and fairly? This issue has received the widespread concern.The discounted cash flow model established by Modigliani and Miller (1963) laid the theoretical and technical framework for the modern enterprise evaluation theory. It has become the most widely used theory because it is simple and practical. However, due to the uncertainty of the future earnings and its own characteristics of Internet companies, the methods valuing traditional enterprise are no longer fully applicable to the Internet business. Therefore, in order to continue the development of the Internet industry and to make better investment decisions, it is very important and urgent to determine an assessment system which is scientific and reasonable.In this paper, although the discounted cash flow valuation still occupies a fundamental position in the valuation study of Internet companies, but there are some limitations. To a certain extent, it underestimates the future profitability of Internet companies. In view of this, this paper attempts to make some amendments and improvements to the traditional assessment methods, it includes introducing the non-financial evaluation index system and adding the real option to evaluate the potential value of the Internet enterprise. So the evaluation result becomes more objective and effective. In the last part, we carried on the empirical analysis to test the rationality of the analysis.The main purpose of this paper is to improve the traditional evaluation methods and to seek the reasonable evaluation measure for Internet enterprises. At the beginning of this paper, the related theories of evaluation and real option are reviewed. Then we analyze the applicability and limitation of the traditional enterprise assessment measures and the rationality of real option in valuing Internet enterprise. Next, we further analyze the source of enterprise value and establish the assessment model.In order to verify the model, we select the representative Internet company— —BIDU as a case for empirical analysis. The data shows that there is little difference between the result obtained by the improved method and the market value of BIDU. Finally, on the basis of the theoretical and empirical research, this paper puts forward corresponding conclusion and prospects of Internet enterprise value assessment system. We hope that the study on the Internet enterprise value assessment theory can promote the improvement and perfection of related theories, and expect to make some beneficial exploration of the Internet enterprise value evaluation system.