The vendors shown below were selected solely on the basis of the quality of their financial services and no financial incentive was provided to PESE. Valuation is often the biggest challenge for investors in unregistered shares because since private equity doesn't trade there is no market price. Even it is possible to get an investor comfortable with a company's valuation, it is to the benefit of the current investors to find more than potential buyer for a deal. Financial conferences and investor lists are a common method of finding new investors. For private companies with more resources often consider hiring an investment banker. For larger companies, the Lehman formula applies for fess while for smaller companies, bankers will often charge as much as $10,000/month and up to 10% of the value of the deal.

Valuation
There are two primary means of valuing any financial security: 1) Discounted Cash Flow and 2) Financial Multiples. The net present value of future cash flows provides a rigorous and rational means of determining a deal price. However, many early stage companies may not yet have obtained the necessary positive free cash flow or have fast growth rates that may distort results. Therefore, many analysts may use financial multiples, such as price-to-earnings or price-to-book value. Using an independent firm with a good reputation can increase the usefulness of a given financial valuation by giving the number more "believability". Some firms we believe have good reputations include:

Conferences
Conference are a traditional way of bringing together a group of companies with a relevant group of viable investors. For larger publicly-traded companies these conference typically take place in the conference rooms of large fancy hotels and are paid for by investment banks hoping to make transaction-based fees. Smaller private companies often have to settle for more modest facilities and sometimes have to pay for the right to present. Some conference services that specialize in small capitalization private companies include:

Investment Banking
Investment bankers are professionals who help a company raise money. For larger companies, where the deal is more likely to take place, bankers will often take their fee exclusively by taking a percentage of the money raised. For smaller companies, where the amount of money raised is less and the probability of completion is smaller, bankers often require a monthly retainer. While such fees seem excessive for many entrepreneurs, bankers can be viewed as simply out-sourced CFO's that can be easily replaced if they are not successful at raising capital. Investment bankers who specialize in small private companies include: