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History

Pepperdine Private Capital Markets Project History

Private Capital Markets Project

PCM Project

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.

 

Some major differences between public and private capital markets include:

Corporate Finance

Private Company Finance

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