Private Capital Markets: Valuation, Capitalization, and Transfer of Private Business Interests + Website, 2nd Edition

Foreword

Until the inaugural edition of Private Capital Markets: Valuation, Capitalization, and Transfer of Private Business Interests was published in 2004, private market players had only corporate finance theories to explain the behavior of the private capital markets. They were left to assume that corporate finance theories explain and predict actions in the private markets. As a corporate finance professor, I too was content to believe that public and private capital markets were substitutes.

An early skeptic, I have come to realize that private markets must be explained using theories tailored to experiences in those markets. This conclusion took me several years and active investigation to realize. I recall sitting in a business appraisal class in 2005 when an instructor introduced a relatively new and innovative book: Private Capital Markets. The instructor made several provocative claims about the book: (1) It contained an integrated theory that described the body of knowledge that applies to valuation, capitalization, and transfer of private companies; (2) businesses have more than one value at any point in time; and (3) it would ultimately change the way that business valuation for privately held companies would be performed.

Although these were interesting comments, I was unmotivated to investigate further. After all, I had a Ph.D. in finance and had been teaching corporate finance for nearly ten years. I was very confident that what I learned and taught in class about ...