Business appraisers report increases in the number of engagements, fees for services, competition, and improved general business conditions over the last 12 months, according to the 2016 Private Capital Markets Report from Pepperdine University Graziadio School of Business and Management. The survey of 168 business appraisers was done in January 2016. They also say that domestic economic uncertainty is the most important issue facing privately held business today. The appraisers also expect decreases in all general business characteristics over the next year except cost of capital and discounts for lack of marketability. Other key findings include:

• The most popular business valuation methods used by respondents were discounted future earnings method (33%), capitalization of earnings method (27%), and guideline company transactions method (16%);

• Recast (adjusted) EBITDA multiple is the most popular when using multiple valuation method;

• Respondents use an average risk-free rate of 2.99% and a market (equity) risk premium of 6.35%; and

• Average long-term terminal growth is estimated at 3.11%.

The survey also presents cost of capital data for each major capital type and its segments. The data reveal that loans have the lowest average rates while capital obtained from angels has the highest average rates.