On the brink of ending its long run, the Private Capital Markets Project from Pepperdine University has secured funding to continue its ongoing survey of expected rates of return of providers in the private capital market.
“I am very pleased to announce that we are back up and running due to generous underwriting from the ESOP Association and Employee Ownership Foundation,” says Dr. Craig R. Everett, the project’s director. This has enabled the project to launch a new cost of capital survey. “We know how important this study is to the ESOP and valuation communities, and we are pleased to ensure that this important independent source of data will continue to be provided to ESOP companies and valuation experts alike,” Patrick Mirza, director of communications for the ESOP Association and Employee Ownership Foundation, told BVWire.
Alternate analysis: Using public market data to estimate the cost of capital for a private company requires many assumptions and adjustments to convert data from actively traded stocks into proxies for private-company valuation. Pepperdine’s project, which produces the annual “Private Capital Markets Report” (available for free), provides an alternate analysis. The analysis is based on an ongoing survey of expected rates of return of investors, lenders, and business owners with respect to private companies.
A BVWire poll in 2019 found that 40% of respondents use the Pepperdine reports. Some practitioners use the reports as a sanity check on more traditional methods, and some use them as a primary method for estimating small private-company cost of capital.
New survey open: For this year’s Pepperdine survey, input is sought from anyone involved in the funding of private businesses, including funding providers, recipients, investors, intermediaries, and advisors. The information you provide is confidential. The direct link to the survey is pepperdine.qualtrics.com/jfe/form/SV_6rgU11Uj6TTzTQq?region=34582.
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