Not so long ago, private companies used bank loans, self-funding or venture capital to finance their growth before they went public or another firm acquired them. Now, however, a growing number of well-heeled private buyers are scooping up shares in start-ups from insiders in hopes of making a killing when the companies go public. Financial journalist Felix Salmon explores these speculative transactions, which cut off the public from participating in a business’s early growth stages and give a small handful of investors a big head start. getAbstract recommends this enlightening article to investors concerned about inequality of opportunity in the stock market.
In this summary, you will learn
- How private purchases of common stock from insiders are benefiting a small group of investors but eroding price discovery,
- Why public market stock transactions are a more egalitarian form of investment, and
- Why private buyer transactions may not be good for markets.
About the Author
Felix Salmon is a financial journalist, blogger and host of the Slate Money podcast.
Comment on this summary
Customers who read this summary also read
Norton Reamer and Jesse Downing
Columbia UP, 2016
Gilles Duruflé et al.
Benjamin Graham and David Dodd
W.W. Norton, 2016