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The Impact of COVID-19 Pandemic on the Private Equity Valuation
- 1 School of Economics, Central University of Finance and Economics, Beijing, 100081, China
- 2 School of Economics and Management, Shanghai University of Political Science and Law, Shanghai, 201701, China
* Author to whom correspondence should be addressed.
Abstract
As the downward pressure on the world economy increases, the financial industry continues to suffer, especially private equity funds. In recent years, the frequent occurrence of major special events and hot news around the world cannot help but make people doubt whether these special events will have an impact on the valuation of private funds. This paper takes COVID-19, the most typical and influential special event in recent years, as an example, combined with various data during COVID-19, to discuss the impact of the epidemic on private equity valuation models and the private equity market. This paper finds that the COVID-19 pandemic has severely affected the valuation accuracy of discounted cash flow method and made the valuation of the market method lower than the true value of the company. While sectors such as real estate, tourism and hospitality and logistics have been severely negatively impacted by COVID-19, the pandemic has boosted sectors such as fintech, healthcare, pharmaceuticals and biotechnology. After the test of this epidemic, investors and management teams need to make timely adjustments to valuation models, while taking into account long-term market trends and industry changes, more prudently evaluate investment opportunities, and make sound investment decisions.
Keywords
Private Equity, COVID-19 Pandemic, Discounted Cash Flow
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Cite this article
Guo,Y.;Li,P. (2024). The Impact of COVID-19 Pandemic on the Private Equity Valuation. Advances in Economics, Management and Political Sciences,95,132-140.
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The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.
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Volume title: Proceedings of the 2nd International Conference on Management Research and Economic Development
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