John K. Paglia

Part I: Appraiser Versus Real World Debates: How Many Appraisers Can Dance on the Head of the Private Capital Markets?

The largest unchartered territory on the business appraisal map is the private capital markets. These markets contain more than 99% of business entities comprising millions of companies and generate half of the gross domestic product of the United States and the world. Not only are the companies operating in these markets difficult to value, but there is no, one, unified agreed upon method of how to approach cost of capital determinations for valuation engagements. The intention of this series of papers is to take a look at how we approach cost of capital to value private companies. This first article will take a look at the practices and methods appraisers use as well as some of the problems with those methods. Article two will delve more deeply into understanding the differences in the private capital markets, clearly define the relevant financing and capital markets for privately held companies, and examine the private capital markets, including trends, current practices, and activities before concludi...

Part II: Appraiser vs. Real-World Debates: The Case for Using Private Capital Markets Data

In the 1st part of this series we focused on how appraisers and the real world have such differing views on ‘costs of capital,’ ‘capital access,’ and, thus, valuation. In Part I, entitled “Appraisers vs. Real World Debates: How many appraisers can dance on the head of the private capital market?,” I referenced that there is a considerable gap between reality and the hypothetical, which further limits the strategic value of business appraisals. In this article, we offer insights, data, and approaches to make cost of capital development more relevant.

The Private Capital Access Index: Methodology and Implications

Starting in the first quarter of 2012, the Pepperdine Private Capital Markets Project has done a quarterly survey of private companies asking questions about the demand for and availability of external capital for their business. Through factor analysis, we have identified a subset of variables from this survey data that together represent the overall state of the world with respect to private companies’ demand for and access to capital. From this data and using factor analysis we construct two indices, scaled from zero to one hundred. The first, called the Private Capital Access (PCA) Index, reflects the current availability of capital to private firms. The second, the Private Capital Demand (PCD) Index, measures the current need for external capital by these same firms.

Can Publicly Traded Company Multiples Shed Insights on Discounts for Lack of Marketability

Abstract This study matches private firm sales transactions with publicly traded firms to examine the issue of discounts for lack of marketability. Using sales and profitability multiples for match...

Implementing a Dollar-Cost Averaging Investment Strategy: Does the Date of the Month Matter?

Based upon typical monthly investing, whereby an administrator uses a dollar cost averaging strategy to invest equal amounts of funds into the market each month, the authors explore the question: Does the date of the month on which one puts his money into the stock market affect portfolio returns? They found the answer to be a resonant yes, based upon monthly investments of

An Empirical Exploration of Financial Covenants in Large Bank Loans

1 from 1990 to 2005 invested in three major indices: the Dow Jones Industrial Average, the NASDAQ, and the S&P 500.