Although it may be hard to believe, this book could easily be 500 to 1,000 pages longer. Nearly every chapter topic could be developed into a book. Since the first edition was released in 2004, many chapters have spawned numerous books. Perhaps the most important part of writing, however, is making hard choices.
Much of the thinking behind this book is based on several macro insights. First, corporate finance theory does not predict behavior in private capital markets. Appendix A contains a discussion of corporate finance principles and shows they are not particularly useful to private managers. Second, people who view valuation, capitalization, and transfer as discrete and unrelated areas do not grasp the larger picture and are likely to make incorrect financing and investment decisions.
Finally, the private capital body of knowledge is large and expanding. Its full practice is effectively limited to those who dedicate themselves to its study.
A number of important themes are presented in this book. Taken together, they form the basis for a fuller description of private capital markets and middle-market finance theory. Several themes are presented next. The chapter then concludes with a discussion of major issues that require further study.
Public and private capital markets are not substitutes for each other because they rely on different capital markets theories to explain market behavior.
Until now, private companies have been viewed in the literature ...