This is a question related to DCF (Discounted Cash Flow) among the methods of enterprise value assessment.
Hello!
I'm a startup that is currently setting up a corporation, not an existing unlisted company, and
for investment attraction
IR
is being created, and I am seeking a value assessment of the future projected profit and loss statement and the corresponding business plan.
.
In this case, there are no actual financial statements, and based on the estimated
(
revenue,
operating profit,
net income, etc.
)
only a future
5
year projected income statement is available.
1.
I have decided to use the income value assessment method
(DCF
method)
as the main evaluation and
2.
the comparative value assessment method as a sub-evaluation to complement each other.
.
As there are no comparable companies within the same industry, I compared and evaluated listed and unlisted companies focusing on operating income and net profit. As a result,
Considering the large difference in market capitalization between listed and unlisted companies, and the fact that it is a startup,
I ultimately compared and evaluated it with the net profit of an unlisted company. Is this the right direction, or if there is a better method, please let me know.
I am currently estimating the value of the business plan using the above
2
methods.
.
In this case,
there are the following questions during the DCF calculation process.
.
# DCF
Calculation Formula
:
Expected Cash Flow
*[1/(1+
Discount Rate
-
Growth Rate
)
＾
(
Order of the Year
)]
1.
I am curious whether the above formula is correct.
(
It's a similar formula, but
I also noticed formulas that end with dividing the cash flow by the discount rate and growth rate without squaring the
‘
Order of the Year
’
)
2.
When I substitute the values according to that formula, I'm having a problem where the value becomes negative if the
‘
Growth Rate
’
is greater than ‘1+
Discount Rate
’.
3.
Discount Rate
=
Risk-Free Interest Rate
+
Stock Sensitivity to Market
*(
Market Risk Premium
-
Risk-Free Interest Rate
)
-
Risk-Free Interest Rate
=
Government Bond Yield
=2%(3
year
~30
year maturity, the average of the lowest and highest values is about
1.8%
so
I set it to 2%, is this a correct assumption
?)
-
Stock Sensitivity to Market
=(
Typically, the yield for about
3
years is extracted and calculated, and if the average yield for
3
years is
100%
then does this mean that this number is considered as
‘1’
?)
(
If the business belongs to a structurally growing industry group that is unrelated to the economic flow, then the meaning of sensitivity to the market is almost non-existent, so if you set it to a minimum value of approximately
0.1,
is this a correct assumption
?)
4.
Market Risk Premium
=6%(
I searched portal sites and found articles stating that analysts and other field experts typically set it to
5~7%, so I set it to an average value of
6%, is this a correct assumption
5. The last question is a legal ISSUE, not an accounting one.
In the case of a knowledge-intensive business based on ideas, not a technology-intensive business where a technology evaluation is possible, when attracting investment, in order to protect business know-how and business
(
sales
)
secrets, what kind of investment agreement with the investor (corporation) should be made to protect the business secrets and, at the same time, achieve a mutually beneficial Win-Win situation that the investor can also accept?
Thank you.
.
I will give you 500 points.
Have a pleasant afternoon.
^^
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