Study On The Value Evaluation Methods Of PE Funds For Internet Companies

Under the new situation of mass entrepreneurship and innovation,the number of private equity funds and Internet companies have increased significantly,while the PE fund for the evaluation methods of Internet companies still did not keep up with the pace of development,leading to the traditional value evaluation methods can not reflect the real value of an Internet enterprise accurately.This paper studies on the value evaluation method of PE fund for Internet companies in the new situation of the economic transformation,and researches limitations of various evaluation methods in use with the form of case study,and makes a comparison.This paper mainly uses literature analysis,comparative analysis,combination of theory and case analysis,sensitivity analysis,qualitative and quantitative analysis method to study the case,and draw relevant conclusions.In this paper,I use the absolute valuation method-DCF method to evaluate the value of C company,and study the reason why this method undervalues C company.The relative valuation method is also used.And innovative use of P/GMV method improves the P/S method.The value evaluation method based on user dimension of Metcalfs rule to analyze the value of the Internet companies is used as well,and the Metcalf rule is decomposed into the number of users and the quality of users based on MAU and ARPU to assess the value of Internet enterprises respectively,and achieved good result.In this paper,through the comparison of various methods,it is concluded that the DCF method not only assumes a large number of conditions,but also the evaluation results are too sensitive to the discount rate,and the evaluation results are not satisfactory.PE funds should turn attention to IRR.The relative valuation method to assess the value of Internet companies is a more accurate method and is easy to operate.The P/GMV model and the evaluation method based on user dimension of Metcalf's rule make a good assessment for the PE fund to Internet enterprises.Not only the operation mode is simpler,and the evaluation result is more ideal.The relative valuation method based on the market provides PE funds a good reference.