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PCA Index Survey Responses

Trend Analysis
CraigEverett,Ph.D.
Director,PepperdinePrivateCapitalMarketsProject

22.06.15

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PUBLISHED BY

2012-2015 Pepperdine University. All rights reserved. Pepperdine Private Capital Access Index (PCA Index)
is a trademark of Pepperdine University. PCA Index content is the intellectual property of Pepperdine University
or its third party content providers. Any copying, republication or redistribution of PCA Index content, including
but not limited to caching, framing or similar means, is expressly prohibited without the prior written consent of
Pepperdine University. Pepperdine University shall not be liable for any errors, omissions or delays in PCA Index
content, or for any actions taken in reliance thereon.

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ACKNOWLEDGEMENTS
Id also like to thank the following people at The Graziadio School of Business and Management for their contributions:
David M. Smith, Ph.D.
Dean
John K. Paglia, Ph.D.
Associate Dean, Associate Professor of Finance
Lisa Perry
Director, Marketing and Communications
Irina Shaykhutdinova
Research Associate

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This research was made possible with the support of Dun & Bradstreet.

DUN & BRADSTREET


Jeffrey Stibel
Vice Chairman
Judy Hackett,
Chief Marketing Officer
Aaron Stibel
Chief Technology Officer
Heather Herndon
Director, Marketing and Communications
Brenda Gary
Vice President, Marketing Operations
Lauren Simpson
Marketing and Communications Manager
Bernice Brennan
Manager, Creative Services & Marketing Communications
Trenice Taylor
Marketing Manager

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TABLE OF CONTENTS

I.I.

About
About the
the Private
Private Capital
CapitalAccess
Access (PCA)
(PCA) Index....6
Index....6

II.
II.

Demand
Demand for
for external
external financing....15
financing....15

III.
III.

Accessibility/success
Accessibility/success rate
rate of
of raising
raising new
new capital...21
capital...21

IV.
IV.

Expected
Expected demand
demand for
for external
external financing....31
financing....31

V.
V.

Expected
Expected capital
capital access
access (success)
(success) rates...36
rates...36

VI.
VI.

Hiring/growth
Hiring/growth outlooks
outlooks and
and financing
financing failure
failure impacts42
impacts42

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I. ABOUT THE PRIVATE CAPITAL ACCESS (PCA) INDEX


The Pepperdine Private Capital Access Index (PCA) is a quarterly indicator produced by the Graziadio School of Business and
Management at Pepperdine University, and with the support of Dun & Bradstreet. The index is designed to measure the demand
for, activity, and health of the private capital markets. The purpose of the PCA Index is to gauge the demand of small and
medium-sized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of
private financing markets.

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ABOUT THE PRIVATE CAPITAL ACCESS (PCA) INDEX SURVEY

5,977 completed responses in Q2, 2012

4,686 completed responses in Q3, 2012

3,426 completed responses in Q4, 2012

2,713 completed responses in Q1, 2013

1,948 completed responses in Q2, 2013

1,577 completed responses in Q3, 2013

3,175 completed responses in Q4, 2013

3,615 completed responses in Q1, 2014

1, 251 completed responses in Q2, 2014

2,361 completed responses in Q3, 2014

2,131 completed responses in Q4, 2014

3, 573 completed responses in Q1, 2015

3, 693 completed responses in Q2, 2015

2, 893 completed responses in Q3, 2015

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PRIVATE CAPITAL ACCESS (PCA) AND PRIVATE CAPITAL DEMAND (PCD) INDEX
RESULTS - WHOLE SAMPLE
Total Market
2012-Q2
2012-Q3
2012-Q4
2013-Q1
2013-Q2
2013-Q3
2013-Q4
2014-Q1
2014-Q2
2014-Q3
2014-Q4
2015-Q1
2015-Q2
2015-Q3
2015-Q4
Change
Pct. Change
8

PCAIndex
27.8
27.0
27.3
25.6
26.8
27.5
27.8
28.3
28.9
28.7
29.6
29.6
30.0
30.8
31.2
0.4
1.4%

PCDIndex
37.0
36.5
35.1
32.7
33.4
31.7
32.8
32.3
31.1
29.9
31.1
32.6
35.0
35.3
33.6
-1.7
-4.7%

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PRIVATE CAPITAL ACCESS (PCA) AND PRIVATE CAPITAL DEMAND (PCD) INDEX
RESULTS WHOLE SAMPLE
100
90
80
70
60
50
40
30
20
10
0

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SMALL BUSINESS PCA AND PCD INDEX RESULTS


(< $5M IN REVENUES)
Total Market
2012-Q2
2012-Q3
2012-Q4
2013-Q1
2013-Q2
2013-Q3
2013-Q4
2014-Q1
2014-Q2
2014-Q3
2014-Q4
2015-Q1
2015-Q2
2015-Q3
2015-Q4
Change
Pct. Change
10

PCAIndex
26.6
26.0
26.3
24.6
26.3
26.8
26.6
27.1
27.7
27.5
28.5
28.9
29.2
30.3
30.3
0.0
0.1%

PCDIndex
38.8
38.0
36.5
33.2
34.3
32.3
33.9
33.4
32.1
30.8
31.9
33.2
36.2
36.8
34.9
-1.9
-5.2%

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SMALL BUSINESS PCA AND PCD INDEX RESULTS


(< $5M IN REVENUES)

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LOWER MIDDLE MARKET PCA AND PCD INDEX RESULTS


($5M $100M IN REVENUES)
Total Market
2012-Q2
2012-Q3
2012-Q4
2013-Q1
2013-Q2
2013-Q3
2013-Q4
2014-Q1
2014-Q2
2014-Q3
2014-Q4
2015-Q1
2015-Q2
2015-Q3
2015-Q4
Change
Pct. Change
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PCAIndex
34.7
33.5
32.7
31.9
34.3
34.7
33.7
36.7
37.0
35.5
37.5
37.6
37.7
36.8
38.8
2.0
5.4%

PCDIndex
32.3
33.1
31.5
30.6
28.7
27.6
26.3
24.8
24.9
25.3
25.5
24.6
24.3
24.7
23.8
-0.9
-3.8%

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LOWER MIDDLE MARKET PCA AND PCD INDEX RESULTS


($5M $100M IN REVENUES)
100
90
80
70
60
50
40
30
20
10
0

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ANNUAL REVENUE CHANGE EXPECTATIONS


BY REVENUE SIZE
15%

10%

5%

0%

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II. DEMAND FOR EXTERNAL FINANCING

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DEMAND FOR FINANCING BY PURPOSE


(% WITH ANY NEED REPORTED)

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STRENGTH OF DEMAND FOR FINANCING


(AMONG THOSE INDICATING DEMAND)
Scale 1-4: slight, moderate, high, extremely high need
4.0
3.0
2.0
1.0
0.0

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RESPONDENTS INDICATING HIGH AND EXTREMELY HIGH DEMAND FOR


FINANCING
(AMONG THOSE INDICATING DEMAND)

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PERCENTAGE INDICATING YES TO IS THE CURRENT BUSINESS FINANCING


ENVIRONMENT RESTRICTING

Growth opportunities for your business?


19

Your ability to hire new employees?


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PERCENTAGE OF RESPONDENTS WHO ATTEMPTED


TO RAISE OUTSIDE FINANCING
IN THE LAST THREE MONTHS
32%

33%

32%

32%
28%

20

26%

26%

28%

29%
26%

28%

29%
26%

29%

26%

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III. ACCESSIBILITY/SUCCESS RATE

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IS IT DIFFICULT OR EASY TO RAISE


NEW EXTERNAL FINANCING?
Equity financing

Debt financing

0%

0%

0%

0%

0%

0%
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FINANCING SUCCESS RATES BY TYPE AND BUSINESS SIZE FOR PRIOR THREE
MONTHS

%
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BANK LOANS: FINANCING SUCCESS RATES BY BUSINESS SIZE FOR PRIOR


THREE MONTHS

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ASSET BASED LOANS: FINANCING SUCCESS RATES BY BUSINESS SIZE FOR


PRIOR THREE MONTHS
100%
80%
60%
40%
20%
0%
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PERCENTAGE OF THOSE WHO ATTEMPTED TO RAISE FINANCING BY TYPE OF


FINANCING FOR PRIOR THREE MONTHS
100%
80%
60%
40%
20%
0%

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MAIN PURPOSE FOR RAISING OR ATTEMPTING


TO RAISE FINANCING

27

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REASONS FOR BUSINESSES NOT ATTEMPTING TO RAISE EXTERNAL FINANCING


(MULTIPLE SELECTIONS)

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PERCENTAGE OF OWNERS WHO TRANSFERRED PERSONAL ASSETS TO


BUSINESS OVER PRIOR THREE MONTHS
42%

42%

41%

41%

41%
35%

37% 37% 38%

35% 36% 34%


33%
33%
29%

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TYPES OF PERSONAL ASSETS TRANSFERRED TO BUSINESS DURING PRIOR


THREE MONTHS
(MULTIPLE SELECTIONS)

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IV. EXPECTED DEMAND FOR EXTERNAL FINANCING

31

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PERCENTAGE OF BUSINESSES PLANNING TO RAISE FINANCING IN THE NEXT


SIX MONTHS
100%
80%
60%
40%

31%

20%

32%

31%

28%

28%

26%

33% 34% 31%


28% 29% 28% 26% 28% 30%

0%
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PERCENTAGE OF RESPONDENTS INDICATING DEMAND FOR NEW FINANCING IN


THE NEXT SIX MONTHS
100%
80%
60%
40%
20%
0%

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STRENGTH OF EXPECTED DEMAND FOR NEW EXTERNAL FINANCING IN THE


NEXT SIX MONTHS
(SCALE 1-4: SLIGHT, MODERATE, HIGH, EXTREMELY HIGH)

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RESPONDENTS INDICATING HIGH OR EXTREMELY HIGH EXPECTED DEMAND


FOR NEW EXTERNAL FINANCING IN THE NEXT SIX MONTHS

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V. EXPECTED ACCESS RATES

36

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DO YOU EXPECT IT WOULD BE EASY OR DIFFICULT TO RAISE NEW FINANCING


IN THE NEXT SIX MONTHS?
Equity financing

37

Debt financing

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LIKELY SOURCES OF FINANCING

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MAIN PURPOSE FOR RAISING EXPECTED FINANCING

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LEVEL OF CONFIDENCE FOR SUCCESSFUL FINANCING


(SCALE 0-4: NONE; SOME; MODERATELY; VERY; COMPLETELY)

40

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REASONS FOR NOT PLANNING ON RAISING FINANCING

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VI. HIRING / GROWTH OUTLOOKS AND FINANCING FAILURE IMPACTS

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NUMBER OF EMPLOYEES PLANNED TO BE HIRED IN THE NEXT SIX MONTHS

0
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1-2

3-5

6-10

11-15

16-20

21-30

31-40

41-50

51-75 76-100
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IMPACTS OF UNSUCCESSFUL FINANCING EVENT IN THE NEXT SIX MONTHS FOR


THOSE PLANNING TO RAISE CAPITAL (MULTIPLE SELECTIONS)

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About
AboutPepperdine
PepperdinePrivate
PrivateCapital
CapitalMarkets
MarketsProject
Project
The
ThePepperdine
PepperdinePrivate
PrivateCapital
CapitalMarkets
MarketsProject
Projectatatthe
theGraziadio
GraziadioSchool
SchoolofofBusiness
Businessand
andManagement
Managementisisthe
thefirst
firstsimultaneous,
simultaneous,
comprehensive,
comprehensive,and
andon-going
on-goinginvestigation
investigationofofthe
themajor
majorprivate
privatecapital
capitalmarket
marketsegments.
segments.The
Theresearch
researchseeks
seekstotounderstand
understandthe
thetrue
true
cost
costofofprivate
privatecapital
capitalacross
acrossmarket
markettypes
typesand
andthe
theinvestment
investmentexpectations
expectationsofofprivately-held
privately-heldbusiness
businessowners;
owners;providing
providinglenders,
lenders,
investors
investorsand
andthe
thebusinesses
businessesthat
thatdepend
dependon
onthem
themwith
withcritical
criticaldata
datatotomake
makeoptimal
optimalinvestment
investmentand
andfinancing
financingdecisions,
decisions,and
andbetter
better
determine
determinewhere
wherethe
theopportunities
opportunitiestotocreate
createlasting
lastingeconomic
economicvalue
valuemay
maybe
berealized.
realized.Download
Downloadreports
reportsand
andfind
findmore
moreinformation
informationatat
http://bschool.pepperdine.edu/privatecapital.
http://bschool.pepperdine.edu/privatecapital.
About
AboutPepperdine
PepperdineUniversitys
UniversitysGraziadio
GraziadioSchool
Schoolof
ofBusiness
Businessand
andManagement
Management
AAleader
leaderin
incultivating
cultivatingentrepreneurship
entrepreneurshipand
anddigital
digitalinnovation,
innovation,The
The
Graziadio
GraziadioSchool
Schoolof
ofBusiness
Businessand
andManagement
Managementof
ofPepperdine
PepperdineUniversity
Universityfocuses
focuseson
onthe
thereal-world
real-worldapplication
applicationof
ofMBAMBAlevel
levelbusiness
businessconcepts.
concepts.The
TheGraziadio
GraziadioSchool
Schoolprovides
providesstudent-focused,
student-focused,globally-oriented
globally-orientededucation
educationthrough
throughpart-time,
part-time,
full-time,
full-time,and
andExecutive
ExecutiveMBA
MBAprograms
programsat
atour
oureight
eightcampuses,
campuses,as
aswell
wellas
asthrough
throughonline
onlineand
andhybrid
hybridformats.
formats.In
In
addition,
addition,The
TheGraziadio
GraziadioSchool
Schooloffers
offersaavariety
varietyof
ofMaster
Masterof
ofScience
Scienceprograms,
programs,aaBachelor
Bachelorof
ofScience
Sciencein
inManagement
Management
degree
degreecompletion
completionprogram,
program,Presidential
Presidentialand
andKey
KeyExecutives
ExecutivesMBA
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andexecutive
executiveeducation
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Follow
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at@GraziadioSchool
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andLinkedin.
Linkedin.

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ThankYou
Craig Everett, Ph.D.
Director,
Pepperdine Private Capital Markets Project
http://bschool.pepperdine.edu/privatecapital
craig.everett@pepperdine.edu
310.506.8543

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