Research on the Evaluation of the High-Tech Start-Up Enterprises

This article argues that there are two key criteria in the evaluation of emerging high-tech enterprises: the available profitability and the potential profitability. The biggest difference between high-tech enterprises and traditional enterprises is the formers' greater emphasis on potential profitability. After the analysis of the traits of start-up high-tech enterprise we obtain that the NPV method is not comprehensive, because it is unable to appraise the value of management flexibility. Faced with the defect of NPV method, the real option theory gives us a new horizon. Because of NPV and ROV methods are interlinked to the expected future cash flow estimates, this article brings up a new method to evaluate the value of high-tech start-ups: the combination of NPV and ROV combined with the Monte Carlo simulation of enterprise expected net cash flow. In the end, we present a case study applying the new method.