Method and Data Analysis in PE Investment Target Enterprise Valuation based on Financial Due Diligence

Abstract

With the maturity of multi-level capital market, PE investment institutions have become an important participant in the capital market and an important choice for high-tech enterprises. PE investment are faced with uneven development of target enterprises. Financial due diligence is an important risk control method before investment. PE investment should identify risks before investment and have accurate valuation judgment on target enterprise. Because of the target enterprise is usually in the initial stage, the internal management is not perfect, and the information is difficult to obtain. The analysis shall be focused on the data of shareholder structure and the sustainable developments. Based on an enterprise producing high-end special robots as an example, this paper analyzes the data of PE financial due diligence. The first part analysis the characteristics of PE financial due diligence: the changes of management, shareholder structure, and profitability. The second part takes high-end special robot enterprise as an example to analyze the data of enterprise structure and profitability. Finally, use the P/E ratio to estimate the value of the target enterprise. As the development of PE investment in China is infancy, and there are no specific provisions and models for financial due diligence. It is expected to fill in this research gap and make a modest contribution to standardize financial due diligence, promote the effective development of PE investment.