"John A. Weeks III" <john[at]johnweeks.com> wrote in message
news:john-0CC457.11194715012008[at]sn-radius.vsrv-sjc.supernews.net...
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In this situation, the board of directors is responsible for providing a
good faith valuation:
http://beysterinstitute.ucsd.edu/abo...valuation.html

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I respectfully speculate that this is not the case. I suspect that there
are many more startups than "established" private companies, and startups
often sell their stock in funding rounds to raise initial and subsequent
capital.

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It's supposed to represent the fair market value of the company; for most
companies, that is significantly higher than the total capital investment.
And for failing companies, that can be significantly lower :-(

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This would mean that the company was indeed selling stock. In this case,
the last offering price can serve as a starting point for the fair market
valuation.

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Par value and fair market value are different beasts.

"The par value of a share is its minimum stated value. Par value typically
does not correlate to the actual value of a share. Common par values are
$0.01, $1.00, or no par. ... For private companies, the actual value of a
share is typically determined by the overall value of the C corp or the book
value."
http://www.fastonlinecorp.com/faqs.shtml#CQ8

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Hence a control premium, which is one reason why offering price is merely a
starting point in determining fair market value.

Mark Freeland
BnetOnewsX[at]sbcglobal.net

In article <478caa3e$1$22644$4c368faf[at]roadrunner.com> ,
"W. Wells" <otf70[at]nc.rr.com> wrote:

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If the company is privately owned, then the stock has no market,
it cannot be traded on the open market. Some companies will buy
and sell their stock, but that is very rare. In these cases, the
value of the stock is mostly a foo-foo number. It is supposed
to represent the total investment in the company divided by the
number of shares. But with many companies, as new investment
comes in, the old investment is written down by doing splits
and reverse splits. Sometimes companies simply assign a par
value to the stock, and if a new offering is approved, they
assign an arbitrary par value to the new offering.

What the stock does do is establish ownership. If you have a
class of stock that has voting rights, then you have some
say-so in the company. You have a much bigger say-so if you
are part of a block of stocks that can vote enough shares to
have a majority.

Stock starts to have real value once a company goes public.
Some privately owned companies will do a public offering. They
do this to give the stock a real value, which is great for
employee stock plans, but at the same time, they hold back
over 50% of the stock, or they make the public stock to be
a non-voting stock. That way, they retain control of the
company despite it being public.

-john-

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Say you are an employee of a company like Publix , a privately owned
company. You are given shares of company stock as a bonus. How do they
determine that the stock is going up or down? Who determines the price of
the stock? You can sell it only to the company, right?