Research On Improvement Of Discount Rate In GC New Energy Company’s Equity Valuation

In recent years,with the growing development of China’s economy,mergers and acquisitions activities are increasing,and the size and number of transactions are also increasing.The number of deals in China’s M&A activities rose 11 percent in 2020,reaching $733.8 billion.In the process of enterprise merger and acquisition,enterprise value assessment has become a crucial link,which directly determines whether the transaction is successful or not and the transaction price of the transaction.The most commonly used method to evaluate the equity value of enterprises is the income method.However,in the process of using FCFE model to evaluate equity value,the determination of specific risk adjustment factor is still very subjective,and there is a lack of specific measurement methods.Therefore,the use of scientific and reasonable methods to measure the specific risk adjustment factor and improve the discounted model of free cash flow of equity can provide objective and accurate evaluation results for the investment activities of enterprises,and also provide some reference for the development of equity value evaluation practice.Combining with the case study method and the comparative analysis research method,by means of GC new energy company equity value assessment case study,found that the evaluation process for a specific measure of risk adjustment factor existence insufficiency,thus to improve,and illustrates the GC new energy company equity valuation in field of application of the improved discount rate process,make the evaluation process more scientific and objective.This paper mainly aimed at the two deficiencies of the specific risk adjustment factor to improve the research.One of the deficiencies is the strong subjectivity of the measurement process,and the other is the lack of specific measurement methods for specific risk adjustment factors.Firstly,according to the specific risk adjustment factors involved in the 60 asset appraisal reports and instructions disclosed by Juchao Information Network,the risk indexes included are summarized and analyzed,and 10 risk indexes are obtained.Secondly,factor analysis was used to standardize risk indicators,and dimensionality reduction was used to extract 4 principal component factors,which could reflect more than 70% of the original information of all indicators.Thirdly,the regression analysis of the four principal component factors was carried out,and the linear regression equation was obtained through the significance test and goodness of fit test.Finally,the original case data were substituted into the regression equation to calculate the equity value of GC new energy company,and the differences before and after improvement were compared.The evaluation results confirmed that the regression equation was reasonable to a certain extent,and the evaluation results were more objective and reasonable.The main contribution of this paper lies in the use of factor analysis to construct a regression model to avoid the subjectivity of measuring the specific risk adjustment factor,and the risk quantification of the specific risks of non-listed companies,so as to provide a reference for measuring the specific risk adjustment factor.