Pricing companies. Ethno-accounting of private equity activity
Benquet, Marlène (2019), Pricing companies. Ethno-accounting of private equity activity, Finance and society, 5, 2, p. 145-164. 10.2218/finsoc.v5i2.4138
Type
Article accepté pour publication ou publiéExternal document link
https://doi.org/10.2218/finsoc.v5i2.4138Date
2019Journal name
Finance and societyVolume
5Number
2Pages
145-164
Publication identifier
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Show full item recordAbstract (EN)
How do private equity firms decide on a fair price for a business? Drawing on 76 semi-structured interviews, this article contributes to the sociology of finance and valuation studies by showing that pricing companies is not just a valuation operation but also a capital-repartition issue. In so doing, it shows how concrete, local pricing methods contribute to the financialisation of the economy through the creation of a new capital accumulation centre. The article’s ethno-accounting approach describes three pricing steps: first, the capital access rules applicable to the private equity firm members (the price rationale); second, the expectations about the capital that can be transferred from the business to the private equity firm (the theoretical price level); and third, the transaction participant coordination mechanisms (culminating in the actual price). This description of the practices and concepts inherent in business valuation sidesteps the traditional divide between price formation in constructivist concepts of value as well as price discovery in substantivist concepts of value. Instead, value is defined as the expectation of a transfer of capital from the productive sphere to the private equity firm.Subjects / Keywords
Sociology of financeRelated items
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