Using the Pepperdine Private Capital Markets Studies in Business Valuations and Economic Damages

Co-Sponsored by the National Association of Certified Valuators and Analysts®  (NACVA®) 

	Program Description		Who Should Attend
	How You Will Benefit		Schedule

Program Description
The article *“Using the Pepperdine Private Capital Markets Studies in Business Valuations and Economic Damages Analyses” by Michael D. Pakter and Miranda Kishel examines how the Pepperdine Private Capital Markets Studies (“Pepperdine Studies”) can be used to strengthen professional analyses involving privately held companies. It provides both a technical overview and practical guidance for integrating this dataset into valuation and damages work.

The authors begin by explaining the origins and purpose of the Pepperdine Private Capital Markets Project, initiated in 2007 to fill the gap in empirical research on private capital markets, which historically lacked transparency compared with public markets. The project collects data directly from market participants—private equity groups, venture capital firms, lenders, and valuation professionals—to estimate costs of capital, expected returns, and investment behaviors. These studies have become a leading resource for understanding risk and return characteristics in private-company finance.

The article discusses how Pepperdine data can inform both business valuations and economic damages calculations. In valuations, it helps professionals select discount rates that reflect the unique risk profiles of privately financed businesses. In economic damages engagements—particularly those involving lost profits—the data’s risk-adjusted returns can be used to discount projected cash flows to present value more accurately. The authors explain how variations in financing sources (e.g., private equity versus senior debt) influence risk and how the Pepperdine data can tailor the discount rate accordingly.

Ms. Kishel provides personal insights from participating in the Pepperdine Studies as both a small-business lender and a valuation professional, highlighting that while the survey offers useful trend information, it is largely based on self-reported estimates. Thus, the authors recommend using the Pepperdine Studies as a corroborative rather than primary data source, supplementing more statistically rigorous tools such as Kroll’s Cost of Capital Navigator or BVR’s Cost of Capital Professional.

The article then contrasts Pepperdine data with other sources—public market data, industry reports, government statistics, and proprietary databases—identifying the strengths and limitations of each. It cautions practitioners about potential shortcomings of the Pepperdine Studies, including small sample sizes, geographic concentration, and selection bias. The authors advise careful data comparison, sensitivity and scenario analysis, and transparent documentation when presenting findings in reports or expert testimony.

Ultimately, the article concludes that while the Pepperdine Studies should not replace empirical datasets, they remain an accessible and valuable reference for identifying market trends, contextualizing risk, and supporting defensible opinions in valuations and economic damages analyses.

How You Will Benefit
After completing this course, attendees will be able to:

• Explain the purpose and origins of the Pepperdine Private Capital Markets Project and how it enhances understanding of private capital markets
• Identify the types of data collected in the Pepperdine Studies and the various categories of market participants surveyed, including lenders, private equity firms, and venture capital groups
• Differentiate between public and private capital markets, and analyze why private markets require specialized approaches to valuation and risk assessment
• Apply Pepperdine cost of capital data to develop or corroborate discount rates in business valuation and economic damages analyses
• Evaluate the strengths and limitations of the Pepperdine Studies, including issues of sample size, self-reporting bias, and geographic concentration
• Utilize Pepperdine data with other resources such as Kroll, BVR, industry reports, government statistics, and proprietary databases to enhance analytical reliability
• Integrate Pepperdine findings effectively into expert reports and testimony by selecting relevant data points and presenting them with transparency and visual clarity
• Illustrate sensitivity and scenario analyses to test the robustness of conclusions that incorporate Pepperdine data in valuations or lost profits calculations

Take Aways
After completing this course, attendees will be able to effectively incorporate the Pepperdine Private Capital Markets Studies into business valuation and economic damages analyses. They will understand how to select and apply cost of capital data from private market sources to develop defensible discount rates and lost profits calculations. Participants will also be able to recognize the strengths and limitations of the Pepperdine data, compare it with other empirical resources, and integrate it transparently into expert reports and testimony. Ultimately, attendees will enhance the accuracy and credibility of their analyses involving privately held companies.

Who Should Attend

Delivery Method Group Internet-Based Program Level Intermediate Advanced Preparation None Prerequisites Previous training or research on subject matter being taught. Such persons are often at a mid-level within the organization, with operational and/or supervisory responsibilities.    Economics 1   Finance 1 Total CPE Hours   2

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