Research On Valuation Of Biomedical Enterprise Under The Dual-class Share Structure

In recent years,the reform of our capital market has been deepened and the system has been improved continuously,the Hong Kong Stock Exchange,Shanghai Stock Exchange,Shenzhen Stock Exchange and the newly-established Beijing Stock Exchange have all introduced the dual-class share structure enterprise listing system with the“Voting rights difference arrangement”.The bio-medicine enterprises with the attribute of scientific and technological innovation choose the dual share structure to go public,which not only satisfies the bio-medicine enterprises to obtain the enterprise development funds through the way of equity financing,at the same time,it protects the control right of the founder of bio-pharmaceutical enterprise.Based on the different impact of dual-class ownership structure and single-class ownership structure on the value of bio-pharmaceutical enterprises,it is necessary to study the valuation of bio-pharmaceutical enterprises with dual-class ownership structure.This paper studies the valuation of bio-medicine enterprises with dual-class share structure by using the methods of literature study,case analysis and comparative analysis.Based on the literature review,it is found that the current research on the dual-class share structure mainly focuses on the reasons for the adoption of the dual-class share structure,the study of the double-class share structure agency problem and investment efficiency.There are three aspects in the research on the performance of dual-class share structure enterprises,and the research on the valuation of dual-class share structure enterprises is lack.Therefore,this paper studies the relevant literature from the aspects of motivation and industry,shareholder category and corporate governance,the impact of dual-class ownership structure on enterprise value,the life cycle of the impact of dual-class ownership structure on enterprise value,and the evaluation of enterprise value,it is found that the impact of dual-class ownership structure on the value of the firm presents a life cycle,the enterprise value of dual-class equity structure and single-class equity structure may go through the stages of premium,loss of premium and discount respectively about 10 years after the initial public offering.Based on the above findings,first of all,the enterprise valuation theory and methods of research and analysis,based on principal-agent theory,life cycle theory and human capital theory,this paper analyzes the key influencing factors of enterprise valuation with two-level equity structure,it is found that the life cycle of the influence of dual-class ownership structure on firm value is reflected in the cyclical influence of firm Founder’s special value and firm principal-agent problem.Founder’s special value affects the operation,investment,financing,dividend policy affects the future cash flow and corporate growth;As the time passes after the initial public offering,the difference between the voting right and cash flow right of the dual-class share structure enterprises may expand with the reduction of the founders’ shares,in addition,at the beginning of the listing,the institutional investors gradually withdrew and the supervision on them weakened,which led to the increase of the agency cost of the dual-class equity structure companies,and then increased the risks of the enterprises,impact on the two-tier equity structure of the future cash flow valuation discount rate.Then,taking Huiyu pharmaceutical as an example,this paper studies and analyzes the bio-medicine industry,the history of operation and the situation of dual-class ownership structure of Huiyu Pharmaceutical,and from the profitability,operating capacity,solvency,growth ability combined with industry comparable companies for comparative research.Then we use the comparable company law and the three-stage free cash flow model to estimate the value of Huiyu pharmaceutical,and through the research we find the life cycle of bio-medicine enterprise value based on the dual-class equity structure,the paper estimates the dynamic discount rate of bio-medicine enterprises in the next 10 years by using CAPM model combined with the adjustment of the specific risk coefficient of bio-medicine enterprises with two-layer equity structure,and forecasts the future cash flow of bio-medicine enterprises with two-layer equity structure in three stages,it is suitable for bio-medicine enterprise valuation with double equity structure.On the one hand,this paper provides a reference method for the valuation of bio-medicine enterprises with dual share structure,it has certain practical significance for the reasonable evaluation of enterprise value under the two-layer share structure.On the other hand,based on the life-cycle impact of dual-class ownership structure on the value of enterprises,the time-type“Sunset Clause” of dual-class ownership structure is set up in the corporate governance supervision of dual-class ownership structure,to some extent,it can alleviate the cyclical problem of agency cost in dual-class share structure enterprises.