A Case Study On The Improvement Of The Discount Rate Of YC Architecture Design Company

With the development of the securities market,the activities of merger and acquisition are increasing gradually,and the equity valuation related has been also gradually coming to focus.Using income approach to evaluate enterprise equity value as reference in M&A pricing,because between different types of enterprises in the main business,capital structure difference,the discount rate needs according to their own characteristics and determine the specific industry,and its various components of quantitative research is combined with a variety of theory.In this paper,a specific case in the evaluation practice is selected as the research object for the determination of the discount rate.First of all,the shortcomings of the determination of the discount rate in the original case are judged and analyzed,and the determination of the three coefficients of the original discount rate,namely the risk-free rate,the enterprise specific risk coefficient and the market system risk coefficient,is of certain subjectivity.Therefore,this paper adopts case analysis,comparative analysis and literature research methods to improve the discount rate used in the original evaluation process as the main research content.For the improvement of risk-free rate of return,this paper combines the effective frontier model in portfolio theory,selects low-risk assets to form a risk portfolio,collects relevant data of risk portfolio and quantifies a more applicable risk-free rate of return.Improvements to the company-specific risk excess returns,in this paper,combined with factor analysis method,to apply to be evaluated the company’s risk evaluation index system,using the SPSS software to the relevant data for the selected comparable companies for dimension reduction analysis,using four public factors of relation obtained by evaluating the company’s unique risk excess returns;For the improvement of the system risk coefficient,this paper combines the principle of comprehensive leverage,uses the relevant financial data of comparable companies and the evaluated companies to calculate their respective comprehensive leverage coefficient,and approximates the ratio of the two as the market system risk coefficient.To sum up,after improving the above three coefficients,the discount rate is constituted again,and the improved discount rate is used to reevaluate the equity value of the enterprise,and the valuation is higher than the original evaluation result.Therefore,based on the judgment of the improvement process,final valuation,and the operating condition and development prospect of the evaluated company,it can be seen that the discount rate in the original evaluation overestimates the operating risk and scale risk of the enterprise,and ignores the growth ability of the evaluated target group as a high-tech enterprise with a relatively large proportion of light assets.Therefore,it is more accurate to use the improved lower discount rate to calculate the higher equity value.Improving the discount rate which played an important role during the evaluation was the core of this paper.Combined with related theories to improve correlation coefficient in a reasonable manner in order to draw more suitable equity valuation method to determine the discount rate for architectural design companies,it’s in order to enhance the objectivity of the discount rate and provide better service to enterprise equity valuation practice which has a certain practical significance,to some extent,enriched the asset class enterprise value appraisal system,to provide theoretical reference for evaluating practice.After further study of the objectivity of the discount rate,this paper argues that,in the process of evaluation practice,the determination of the discount rate to ensure the applicability of the evaluation process and results and objectivity,combined with the specific situation of the enterprise to make a reasonable judgment,avoid the subjectivity of numerical determine,based on appraiser experience to determine relevant numerical value,to determine the value of should be theoretical basis and considering the availability of relevant parameters,as far as possible,and contact the actual maneuverability of guarantee method.