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by Robert T. Slee
Private Capital Markets: Valuation, Capitalization, and Transfer of Private Business Interests + Website, 2nd Edition
Cover
Title Page
Copyright
Dedication
Foreword
Preface
HOW TO READ THIS BOOK
MAJOR GOAL OF THIS BOOK
Acknowledgments
CHAPTER 1: Capital Markets
MARKET STRUCTURE
INFORMATION
WHY ARE MARKETS SEGMENTED?
CHAPTER 2: Middle-Market Finance
MIDDLE-MARKET FINANCE THEORY
TRIADIC LOGIC
MIDDLE-MARKET FINANCE THEORY IN PRACTICE
OWNER MOTIVES
AUTHORITY
TRIANGULATION
PART ONE: Business Valuation
CHAPTER 3: Private Business Valuation: Introduction
PRIVATE INVESTOR EXPECTATIONS DRIVE PRIVATE VALUATION
PRIVATE BUSINESS VALUATION CAN BE VIEWED THROUGH VALUE WORLDS
VALUATION AS A RANGE CONCEPT
TRIANGULATION
CHAPTER 4: Market Value
LEVELS OF PRIVATE OWNERSHIP
TRIANGULATION
CHAPTER 5: Asset Subworld of Market Value
STEPS TO DERIVE NET ASSET VALUE
TRIANGULATION
CHAPTER 6: Financial Subworld of Market Value
SPECIFIC INVESTOR RETURN
SPECIFIC INDUSTRY RETURN
GENERAL INVESTOR RETURNS
TRIANGULATION
CHAPTER 7: Synergy Subworld of Market Value
SYNERGIES
CAPITALIZATION OF BENEFIT STREAMS
DISCOUNTING OF BENEFIT STREAMS
SELLER/BUYER MARKET VALUATION
NONENTERPRISE MARKET VALUATIONS
TRIANGULATION
CHAPTER 8: Fair Market Value
APPRAISAL ORGANIZATIONS
BUSINESS APPRAISAL STANDARDS
FAIR MARKET VALUE PROCESS
KEY STEPS TO DERIVE FAIR MARKET VALUE
DOES THE FAIR MARKET VALUE PROCESS MAKE SENSE?
TEARING DOWN THE BUILDUP MODELS
TRIANGULATION
CHAPTER 9: Fair Value
DISSENTING AND OPPRESSED SHAREHOLDERS
TRIGGERING EVENTS
DETERMINATION OF FAIR VALUE
TRIANGULATION
CHAPTER 10: Incremental Business Value
NATURE OF INCREMENTAL BUSINESS VALUE
PROBLEMS WITH USING TRADITIONAL METHODS
VALUE-BASED APPROACHES
NET PRESENT VALUE
INCREMENTAL BUSINESS VALUE
PRIVATE COST OF CAPITAL MODEL
RAMIFICATIONS OF USING PCOC
INVESTMENT
PROJECT DECISION MAKING
PROBLEMS WITH INCREMENTAL BUSINESS VALUE
VALUE-CREATION STRATEGIES
INCREASE RECAST EBITDA
REDUCE RISK
EMPLOY HIGH-YIELDING CAPITAL
INCREMENTAL BUSINESS VALUE VERSUS MARKET VALUE
TRIANGULATION
CHAPTER 11: Insurable Value
RISK AND INSURANCE
BUY/SELL AGREEMENTS
VALUATION MECHANICS
TRIGGERING EVENTS
KEY PERSON INSURANCE
BUSINESS INTERRUPTION
TRIANGULATION
CHAPTER 12: FASB Value Worlds
FASB FAIR VALUE (ASC 820, FORMERLY FAS 157)
BUSINESS COMBINATIONS (ASC 805, FORMERLY FAS 141R)
IMPAIRED GOODWILL (ASC 350-20)
VALUATION
TRIANGULATION
CHAPTER 13: Intangible Asset Value
SUBWORLDS
INTELLECTUAL PROPERTY
INTELLECTUAL CAPITAL
TRIANGULATION
CHAPTER 14: Other Value Worlds
INVESTMENT VALUE WORLD
OWNER VALUE WORLD
COLLATERAL VALUE WORLD
EARLY EQUITY VALUE WORLD
BANKRUPTCY VALUE WORLD
PUBLIC VALUE WORLD
TRIANGULATION
CHAPTER 15: Private Business Valuation: Conclusion
PRIVATE INVESTOR RETURN EXPECTATIONS
VALUE WORLDS
PRIVATE BUSINESS VALUATION IS A RANGE CONCEPT
TRIANGULATION
FINAL THOUGHTS ON VALUATION
PART TWO: Capital Structure
CHAPTER 16: Capital Structure: Introduction
PUBLIC CAPITAL MARKETS
PRIVATE CAPITAL MARKETS
PEPPERDINE PRIVATE CAPITAL MARKET LINE
KEY ISSUES REGARDING THE PEPPERDINE PRIVATE CAPITAL MARKET LINE
CAPITAL STRUCTURE TREATMENT
TRIANGULATION
CHAPTER 17: Bank Lending
TYPES OF FACILITIES
INTEREST RATES
INTEREST RATE HEDGES
LOAN COVENANTS
HOW BANKS DEAL WITH COVENANT VIOLATIONS
LOAN COSTS
RISK RATINGS
NEGOTIATING POINTS
TRIANGULATION
CHAPTER 18: Government Lending Programs
INDUSTRIAL REVENUE BONDS
BUSINESS AND INDUSTRY LOAN PROGRAM
SMALL BUSINESS ADMINISTRATION PROGRAMS
7(a) LOAN GUARANTY PROGRAM
CERTIFIED DEVELOPMENT COMPANY 504 LOAN PROGRAM
CAPLINES LOAN PROGRAM
EXPORT WORKING CAPITAL PROGRAM
NEGOTIATING POINTS
TRIANGULATION
CHAPTER 19: Equipment Leasing
TYPES OF LEASES
LEASE RATE FACTORS
LESSOR TYPES
COMPARISON OF LEASING AND PURCHASING
NEGOTIATING POINTS
TRIANGULATION
CHAPTER 20: Asset-Based Lending
HOW ASSET-BASED LENDING WORKS
ASSET-BASED LENDERS
TIER 1 ASSET-BASED LENDERS
TIER 2 ASSET-BASED LENDERS
TIER 3 ASSET-BASED LENDERS
NEGOTIATING POINTS
TRIANGULATION
CHAPTER 21: Factoring
HOW FACTORING WORKS
MECHANICS OF FACTORING
FEES AND TERMS
NEGOTIATING POINTS
TRIANGULATION
CHAPTER 22: Mezzanine Capital
LOAN STRUCTURE
MEZZANINE INVESTORS
TARGETED INVESTMENTS
PRICING
DEBT MEZZANINE CAPITAL
EQUITY MEZZANINE CAPITAL
OTHER DEAL TERMS
NEGOTIATING POINTS
TRIANGULATION
CHAPTER 23: Owners, Angels, and Venture Capitalists
STAGES OF PRIVATE EQUITY INVESTOR INVOLVEMENT
PRIVATE PLACEMENTS
FINANCIAL BARN RAISINGS
WITHIN EXISTING BUSINESS RELATIONSHIPS
WHY PRIVATE PLACEMENTS FAIL
PRE- AND POSTMONEY VALUATION
NEGOTIATING POINTS
TRIANGULATION
CHAPTER 24: Private Equity
STAGES OF PRIVATE EQUITY INVESTOR INVOLVEMENT
HEDGE FUNDS
FAMILY OFFICES
TERM SHEET
NEGOTIATING POINTS
TRIANGULATION
CHAPTER 25: Capital Structure: Conclusion
CAPITAL PROVIDERS MANAGE RISK AND RETURN IN THEIR PORTFOLIOS
THE PEPPERDINE PRIVATE CAPITAL MARKET LINE COMPRISES EXPECTED RETURNS
PRIVATE COST OF CAPITAL EMANATES FROM THE PRIVATE CAPITAL MARKETS
HIGH COST OF CAPITAL LIMITS PRIVATE COMPANY VALUE CREATION
INTERMEDIATION IS RELATIVELY INEFFECTIVE IN THE MIDDLE MARKET
TRIANGULATION
PART THREE: Business Transfer
CHAPTER 26: Business Transfer: Introduction
PUBLIC MANAGER AND OWNER MOTIVES
PRIVATE BUSINESS OWNERSHIP TRANSFER SPECTRUM
EMPLOYEE TRANSFER CHANNEL
CHARITABLE TRUSTS TRANSFER CHANNEL
FAMILY TRANSFER CHANNEL
CO-OWNER TRANSFER CHANNEL
OUTSIDE, RETIRE, TRANSFER CHANNEL
OUTSIDE, CONTINUE, TRANSFER CHANNEL
GOING PUBLIC, GOING PRIVATE TRANSFER CHANNEL
EXIT PLANNING
TRIANGULATION
CHAPTER 27: Employee Stock Ownership Plans
OVERVIEW
LEVERAGED ESOPS
ESOPS IN S CORPORATIONS
SETTING UP AN ESOP
POINTS TO CONSIDER
BOTTOM LINE ON ESOPS
TRIANGULATION
CHAPTER 28: Management Transfers
DIFFERENCES BETWEEN MANAGEMENT BUYOUTS AND MANAGEMENT BUY-INS
LIKELY DEAL STRUCTURES
DEALS
POINTS TO CONSIDER
TRIANGULATION
CHAPTER 29: Charitable Trusts
STRUCTURE OF CHARITABLE TRUSTS
CHARITABLE REMAINDER TRUSTS
POINTS TO CONSIDER FOR CRTS
CHARITABLE LEAD TRUSTS
POINTS TO CONSIDER FOR CLTS
COMPARISON OF CRTS AND CLTS
TRIANGULATION
CHAPTER 30: Family Transfers
STOCK GIFTS
PRIVATE ANNUITIES
SELF-CANCELING INSTALLMENT NOTES
GRANTOR-RETAINED ANNUITY TRUSTS
FAMILY LIMITED PARTNERSHIPS
INTENTIONALLY DEFECTIVE GRANTOR TRUSTS
COMPARISON OF FAMILY TRANSFER METHODS
ROLE OF INSURANCE IN FAMILY TRANSFERS
TRIANGULATION
CHAPTER 31: Co-Owner Transfers
BUY/SELL AGREEMENTS
BUY/SELL TYPES
TRIGGERING EVENTS
FUNDING TECHNIQUES
WAYS TO HANDLE DEADLOCKS
WHEN NO BUY/SELL AGREEMENT EXISTS
TRIANGULATION
CHAPTER 32: Outside Transfers: Retire
PREPARATION FOR A TRANSFER
TRANSFER PLAYERS
MARKETING PROCESSES
NEGOTIATED TRANSFERS
PRIVATE AUCTIONS
TWO-STEP PRIVATE AUCTIONS
CLOSING THE DEAL
AFTER THE TRANSFER
TRIANGULATION
CHAPTER 33: Outside Transfers: Continue
CONSOLIDATIONS
ROLL-UPS
BUY AND BUILD OR RECAPITALIZATIONS
RECAPITALIZATION POINTS TO CONSIDER
TRIANGULATION
CHAPTER 34: Going Public, Going Private
DIRECT PUBLIC OFFERINGS
WHICH COMPANIES ARE PUBLIC?
INITIAL PUBLIC OFFERING TEAM
IPO PROCESS
ADVANTAGES OF GOING PUBLIC
DISADVANTAGES OF GOING PUBLIC
GOING PUBLIC KEY POINTS TO CONSIDER
GOING PUBLIC ON FOREIGN EXCHANGES
REVERSE MERGERS
GOING PRIVATE
GOING PRIVATE KEY POINTS TO CONSIDER
TRIANGULATION
CHAPTER 35: Business Transfer: Conclusion
SEGMENTED TRANSFER ACTIVITY AND ARBITRAGE
OWNER MOTIVES CHOOSE THE RANGE OF VALUES
CREATING VALUE IN A PRIVATE BUSINESS REQUIRES PLANNING
TRIANGULATION
CHAPTER 36: Conclusion
THEME 1
THEME 2
THEME 3
THEME 4
THEME 5
PRIVATE CAPITAL MARKETS
WHAT WE DO NOT KNOW
A FINAL THOUGHT
Appendix A: Corporate Finance Theory: Application to Private Capital Markets
Meta-Financial Theory
Corporate Finance Theory
Application of Corporate Finance Theory to Private Capital Markets
Summary
About the Web Site
Index
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