Center for Applied Research

Private Capital Markets Project

History

In 2004, Robert T. Slee wrote "Private Capital Markets: Valuation, Capitalization, and Transfer of Private Business Interests." In his book, Mr. Slee made the point that private capital markets are very important: they contain millions of companies, which collectively account for over 99% of the businesses in the U.S. In addition, private companies generate nearly half of the U.S. GDP and employment levels. He further asserts that private capital markets are unique and not adequately described by corporate financial theory. This led Slee to establish a theoretical framework by which to examine the opaque private capital markets.

Some of the major differences between public and private capital markets include the following:
Corporate Finance	Private Company Finance
Use of a C-Corporation Value is established by a market Ready access to public capital markets Owners have limited liability Owners are well diversified Professional management Company has infinite life Liquid securities efficiently traded Profit maximization as goal	Can be any entity (S, LLC, etc.) Value is established at a point in time No access to public capital markets Owners potentially have unlimited liability Owners have one primary asset Owner management Typical company life of one generation Illiquid securities inefficiently traded Personal wealth creation as goal

Realizing the need to disseminate complete private capital market data over periodic intervals, the members of the project team joined together to tackle this goal. The founding members of the project team are:

	John Paglia Pepperdine University 310-506-4402 john.paglia@pepperdine.edu
	Rob Slee Robertson & Foley Investment Bankers 704-609-2244 rob@robertsonfoley.com

The project team is grateful for the support by Dean Linda Livingstone and Associate Dean David Smith of Pepperdine University.