Private Capital Access Index Study Results Q1 2012

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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 Credibility Corp. 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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Private Capital Access Index Study Results Q1 2012

  1. 1. PCA Index Survey Responses First Quarter 2012 John K. Paglia, Ph.D., CFA, CPA Associate Professor of Finance Director, Pepperdine Private Capital Markets Project© 2012 Pepperdine University. All rights reserved. Pepperdine Private Capital Access Index (“PCA Index”) is a trademark ofPepperdine University. PCA Index content is the intellectual property of Pepperdine University or its third party contentproviders. Any copying, republication or redistribution of PCA Index content, including but not limited to caching, framing orsimilar means, is expressly prohibited without the prior written consent of Pepperdine University. Pepperdine University shallnot be liable for any errors, omissions or delays in PCA Index content, or for any actions taken in reliance thereon.
  2. 2. This research was made possible with the support of Dun & Bradstreet Credibility Corp., the leading provider of credit building and credibility solutions for businesses. DUN & BRADSTREET CREDIBILITY CORP. Jeffrey Stibel, Chair and Chief Executive Officer Judy Hackett, Chief Marketing Officer Aaron Stibel, Senior Vice President, Technology Erik Simon, Director, Marketing and Communications Brenda Gary, Senior Marketing Director Bernice Brennan, Manager, Creative Services & Marketing Communications Trenice Taylor, Marketing Manager
  3. 3. ACKNOWLEDGEMENTSI’d also like to thank the following people at The Graziadio School of Business and Management for their contributions: Dean Linda Livingstone Associate Dean David M. Smith Mike Sims, Executive Officer, CER Douglass Gore, Director of Public Relations Mark Chun, Director, Center for Applied Research Bill Bleuel, Professor of Decision Sciences Irina Shaykhutdinova, Research Analyst Sean Gray, Graduate Assistant and consultant, Simon James, Ph.D.
  4. 4. OutlineI. About the Private Capital Access (PCA) Index……...….…5II. Current demand/need for external financing………..…….7III. Accessibility/success rate of raising new capital……...…14IV. Satisfaction rates for various capital sources………..…..21V. Expected demand for external financing……………..…..26VI. Expected capital access (success) rates……………..….31VII. Hiring plans and impacts of unsuccessful financing….....37VIII. Jumpstart Our Business Startups (JOBS) Act …….….....40IX. Financing conditions by state...……………………………44X. About the respondents…………………………………..…59 4
  5. 5. I. About the Private Capital Access (PCA) IndexThe Pepperdine Private Capital Access Index (PCA) is a quarterlyindicator produced by the Graziadio School of Business andManagement at Pepperdine University, and with the support of Dun &Bradstreet Credibility Corp. The index is designed to measure thedemand for, activity, and health of the private capital markets. Thepurpose of the PCA Index is to gauge the demand of small andmedium-sized businesses for financing needs, the level of accessibilityof private capital, and the transparency and efficiency of privatefinancing markets. 5
  6. 6. About the Q1 2012 Private Capital Access (PCA) Index Survey• 25 questions• Invite to participate distributed to sample from Dun & Bradstreet Credibility Corp.’s business database• 5,977 completed responses• Where relevant, responses are segmented by revenues sizes (<$5 million; $5 million to $100 million)• Responses collected from Apr. 3 – Apr. 10 6
  7. 7. II. Current demand/need for external financing 7
  8. 8. Demand for Financing by Purpose and Size (% with any need reported) 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Planned Working Growth due Finance Refinance Withdraw growth or capital to increased worsening existing loans wealth for expansion, fluctuations demand operating or equity owners including (already conditions acquisitions realized) (not yet realized)Whole sample 66.1% 65.3% 56.0% 40.9% 38.4% 27.5%< $5 million 52.0% 56.4% 47.2% 32.5% 26.6% 22.6%$5 -$100 million 53.4% 52.0% 46.5% 25.8% 27.2% 23.1% 8
  9. 9. 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 Planned Working Growth due to Finance Refinance Withdraw growth or capital increased worsening existing loans wealth for expansion, fluctuations demand operating or equity owners including (already conditions acquisitions realized) (not yet realized)Whole sample 2.5 2.2 2.1 2.2 2.4 1.9< $5 million 2.4 2.2 2.1 2.2 2.4 1.9$5 -$100 million 2.4 2.1 2.1 2.0 2.3 2.0 9
  10. 10. Respondents Indicating High and Extremely High Demand for Financing (among those indicating demand) 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Planned Working Growth due Finance Refinance Withdraw growth or capital to increased worsening existing loans wealth for expansion, fluctuations demand operating or equity owners including (already conditions acquisitions realized) (not yet realized)Whole sample 47.3% 36.8% 34.2% 35.2% 42.4% 25.0%< $5 million 46.0% 36.7% 33.2% 35.2% 43.3% 23.9%$5 -$100 million 43.8% 31.7% 34.2% 26.9% 37.7% 26.5% 10
  11. 11. Percentage Indicating “Yes” to “Is the current business financing environment restricting…”100% 64%80% 61% 55% 47% 51%60% 32%40%20% 0% Growth opportunities for your business? Your ability to hire new employees? Whole sample < $5 million $5 -$100 million 11
  12. 12. Trade Accounts (Accounts Receivable) Payment Period Trends Over the Past Three Months100% 90% 80% 63% 70% 56% 55% 60% 50% 36% 37% 30% 40% 30% 8% 8% 8% 20% 10% 0% Accelerated (receiving Slowed (receiving payments Stayed the same payments from customers from customers slower than faster than three months three months ago) ago) Whole sample < $5 million $5 million -$100 million 12
  13. 13. Percentage of Respondents Who Attempted toRaise Outside Financing in the Last 6 Months100%80%60% 39% 32% 32%40%20% 0% Whole sample < $5 million $5 -$100 million 13
  14. 14. III. Accessibility/success rate 14
  15. 15. Is it Difficult or Easy to Raise New External Financing? Equity financing Debt financing 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% Difficult Neither Easy Difficult Neither Easy difficult difficult nor easy nor easyWhole sample 74% 14% 12% Whole sample 74% 12% 14%< $5 million 77% 14% 10% < $5 million 77% 11% 11%$5 -$100 million 64% 18% 18% $5 -$100 million 58% 15% 27% 15
  16. 16. Financing Success Rates by Type and Business Size for Prior Six Months 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Friends Grants Crowd Trade Credit Loan - Credit Lease Bank CDFI/ Asset Factor Angel Vent. Private Mezz. Hedge and (SBIR, funding credit card - pers. card - loan - Credit based capital capital equity lender fund family STTR, pers. biz. biz. union lender group etc.)Whole sample 71% 24% 7% 64% 62% 48% 59% 59% 45% 14% 20% 31% 20% 8% 17% 9% 2%< $5 million 73% 23% 8% 63% 62% 48% 56% 56% 36% 12% 12% 31% 16% 7% 12% 4% 1%$5 -$100 million 88% 46% 9% 84% 73% 59% 81% 83% 76% 32% 53% 54% 33% 23% 46% 30% 15% 16
  17. 17. Main Purpose for Raising or Attempting to Raise Financing 100% 80% 60% 40% 20% 0% Growth or Working Refinancing Replacing Finance Withdraw Other expansion capital existing equipment worsening wealth for (incl. fluctuations loans or or facilities operations owners acquis.) equity unrelated conditions to growth or expansion Whole sample 42% 29% 12% 6% 6% 1% 5% < $5 million 38% 32% 11% 6% 7% 1% 4% $5 -$100 million 49% 21% 16% 7% 2% 1% 4% 17
  18. 18. Reasons for Businesses Not Attempting to Raise External Financing (Multiple Selections) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Enough Sufficient Weak Business Lack of Not Loss of Waiting Cease Other cash flow financing economy would be expertise enough control / for operation in place rejected time flexibility cheaper / liquidate financingWhole sample 45% 25% 23% 22% 13% 12% 6% 8% 2% 7%< $5 million 44% 22% 25% 25% 15% 13% 6% 8% 1% 6%$5 -$100 million 58% 44% 14% 10% 3% 4% 5% 5% 0% 4% 18
  19. 19. Percentage of Owners Who Transferred Personal Assets to Business Over Prior Six Months100% 90% 74% 80% 70% 57% 53% 60% 42% 46% 50% 40% 25% 30% 20% 1% 1% 1% 10% 0% Yes No Unsure Whole sample < $5 million $5 -$100 million 19
  20. 20. Type of Personal Assets Transferred to BusinessDuring Prior Six Months (Multiple Selections) 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Personal Personal Personal loan Cash from Home equity Other savings / credit card the sale of loan investments purchases personal assetsWhole sample 68.1% 39.4% 33.6% 17.1% 12.1% 4.0%< $5 million 67.7% 40.2% 33.6% 17.4% 12.6% 3.6%$5 -$100 million 68.4% 30.1% 34.2% 10.4% 15.5% 3.1% 20
  21. 21. IV. Satisfaction rates 21
  22. 22. Pricing and Contract Terms Satisfaction Rates (for those with a successful raise) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Friends Grants Crowd Trade Credit Loan - Credit Lease Bank CDFI/ Asset Factor Angel Vent. Private Mezz. Hedge and (SBIR, funding credit card - pers. card - loan - Credit based capital capital equity lender fund family STTR, pers. biz. biz. union lender group etc.)Whole sample 89% 89% 70% 83% 45% 69% 61% 78% 82% 85% 71% 50% 80% 67% 64% 58% 67% 22
  23. 23. General Financing Process Satisfaction Rates (by Outcome) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Friends Grants Crowd Trade Credit Loan - Credit Lease Bank CDFI/ Asset Factor Angel Vent. Private Mezz. Hedge and (SBIR, funding credit card - pers. card - loan - Credit based capital capital equity lender fund family STTR, pers. biz. biz. union lender group etc.)Successful 74% 70% 80% 80% 59% 62% 73% 79% 71% 76% 67% 65% 65% 63% 74% 67% 50%Unsuccessful 30% 11% 7% 23% 13% 14% 17% 14% 8% 10% 8% 9% 17% 15% 14% 11% 8% 23
  24. 24. Percentage of Those Satisfied with the Amountof Time Elapsed from Point of First Contact until Funds Were Received (for those successful raises) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Friends Grants Crowd Trade Credit Loan - Credit Lease Bank CDFI/ Asset Factor Angel Vent. Private Mezz. Hedge and (SBIR, funding credit card - pers. card - loan - Credit based capital capital equity lender fund family STTR, pers. biz. biz. union lender group etc.)Whole sample 78% 58% 44% 79% 71% 65% 81% 82% 71% 70% 61% 67% 59% 53% 55% 67% 67% 24
  25. 25. Percentage of Those Unsuccessful Who Feel the General Category of Financing is a Still a Good Fit for Their Business 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Friends Grants Crowd Trade Credit Loan - Credit Lease Bank CDFI/ Asset Factor Angel Vent. Private Mezz. Hedge and (SBIR, funding credit card - pers. card - loan - Credit based capital capital equity lender fund family STTR, pers. biz. biz. union lender group etc.)Whole sample 28% 57% 33% 62% 34% 47% 59% 52% 67% 62% 52% 37% 62% 57% 58% 37% 39% 25
  26. 26. V. Expected demand for external financing 26
  27. 27. Percentage of Businesses that Are Planning to Raise Financing in the Next Six Months100%80% 52%60% 47% 46% 31% 32% 31%40% 22% 23% 17%20% 0% Yes No Unsure Whole sample < $5 million $5 million -$100 million 27
  28. 28. Percentage of Respondents Indicating Demand for New Financing in the Next Six Months 100% 80% 60% 40% 20% 0% Planned Expected Growth due Expected Refinance Withdraw future working to expected worsening existing wealth for growth or capital increased operating loans or owners expansion fluctuations demand conditions equityWhole sample 63% 61% 59% 35% 36% 25%< $5 million 64% 63% 60% 38% 37% 25%$5 million -$100 million 61% 55% 56% 25% 35% 25% 28
  29. 29. Strength of Expected Demand for New External Financing in the Next Six Months (Scale 1-4: Slight, Moderate, High, Extremely High) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Planned Expected Growth due Expected Refinance Withdraw future working to expected worsening existing wealth for growth or capital increased operating loans or owners expansion fluctuations demand conditions equityWhole sample 2.4 2.2 2.2 1.9 2.4 1.9< $5 million 2.4 2.2 2.2 1.9 2.4 1.9$5 million -$100 million 2.3 2.0 2.1 1.7 2.3 1.8 29
  30. 30. Respondents Indicating High or Extremely HighExpected Demand for New External Financing in the Next Six Months 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% Planned Expected Growth due Expected Refinance Withdraw future working to expected worsening existing wealth for growth or capital increased operating loans or owners expansion fluctuations demand conditions equityWhole sample 45.9% 37.1% 38.6% 27.5% 43.6% 24.2%< $5 million 44.5% 36.7% 37.4% 26.3% 43.8% 23.9%$5 million -$100 million 40.3% 29.6% 32.7% 19.6% 41.0% 20.6% 30
  31. 31. VI. Expected access rates 31
  32. 32. Do You Expect It Would Be Easy or Difficult toRaise New Financing in the Next Six Months? Equity financing Debt financing 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% Difficult Neither Easy Difficult Neither Easy difficult difficult nor easy nor easy Whole sample 71% 12% 17% Whole sample 69% 11% 20% < $5 million 74% 12% 14% < $5 million 74% 10% 16% $5 -$100 million 56% 17% 27% $5 -$100 million 50% 16% 34% 32
  33. 33. Likely Sources of Financing 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Friends Grants Crowd Trade Credit Loan - Credit Lease Bank CDFI/ Asset Factor Angel Vent. Private Mezz. and (SBIR, funding credit card - pers. card - loan - Credit based capital capital equity lender family STTR, pers. biz. biz. union lender group etc.)Whole sample 32% 29% 35% 10% 22% 32% 40% 33% 68% 36% 35% 17% 30% 26% 28% 14% 33
  34. 34. Main Purpose for Raising Expected Financing 100% 80% 60% 40% 20% 0% Growth or Working Refinancing Replacing Finance Withdraw Other expansion capital existing equipment worsening wealth for (incl. fluctuations loans or or facilities operations owners acquisition) equity unrelated conditions to growth or expansionWhole sample 58% 21% 9% 5% 3% 1% 3%< $5 million 57% 22% 9% 6% 3% 1% 3%$5 -$100 million 59% 19% 10% 6% 2% 2% 1% 34
  35. 35. Level of Confidence for Successful Financing (Scale 0-4: none; some; moderately; very; completely) 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Friends Grants Crowd Trade Credit Loan - Credit Lease Bank CDFI/ Asset Factor Angel Vent. Private Mezz. Hedge and (SBIR, funding credit card - pers. card - loan - Credit based capital capital equity lender fund family STTR, pers. biz. biz. union lender group etc.)Whole sample 1.9 1.5 2.1 1.3 2.0 1.7 1.9 2.1 1.6 1.2 1.4 2.0 1.4 1.3 1.4 1.4 1.4< $5 million 1.9 1.4 2.0 1.2 2.0 1.6 1.8 2.0 1.4 1.1 1.2 2.0 1.4 1.3 1.3 1.3 1.4$5 -$100 million 2.1 1.7 2.7 1.7 3.1 2.3 2.7 2.7 2.3 1.5 1.9 2.3 1.9 1.4 1.5 1.6 1.5 35
  36. 36. Reasons for Not Planning on Raising Financing 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Enough Sufficient Weak Business Lack of Not Loss of Waiting Cease Other cash flow financing economy would be expertise enough control / for operation in place rejected time flexibility cheaper / financing liquidateWhole sample 61% 37% 19% 13% 6% 6% 5% 4% 2% 5%< $5 million 59% 33% 22% 16% 7% 7% 6% 5% 2% 5%$5 -$100 million 72% 54% 9% 4% 1% 2% 2% 2% 0% 3% 36
  37. 37. VII. Hiring plans and impacts ofunsuccessful financing attempt 37
  38. 38. Number of Employees Planned to Be Hired in the Next Six Months 40% 35% 30% 25% 20% 15% 10% 5% 0% 0 1-2 3-5 6-10 11-15 16-20 21-30 31-40 41-50 51-75 76- 101- More 100 200 than 200Whole sample 31% 34% 19% 8% 3% 2% 1% 1% 1% 0% 0% 0% 0%< $5 million 33% 37% 17% 7% 2% 1% 1% 0% 0% 0% 0% 0% 0%$5 million -$100 million 16% 24% 26% 12% 5% 6% 3% 2% 2% 1% 1% 1% 1% 38
  39. 39. Impacts of Unsuccessful Financing Event in the Next Six Months for Those Planning to Raise Capital (Multiple selections) 100% 80% 60% 40% 20% 0% Slower Hire fewer new Reduce Sell business No expected business employees number of assets or shut impacts on growth than planned employees down growth, (layoffs) business size, or hiring plansWhole sample 73% 58% 23% 24% 11%< $5 million 74% 60% 22% 25% 10%$5 million -$100 million 76% 60% 28% 13% 11% 39
  40. 40. VIII. Jumpstart Our Business Startups (JOBS) Act 40
  41. 41. Has the passing of the JOBS Act increased thelikelihood that business owners will raise capital via crowdfunding?100% 90% 80% 61% 70% 53% 51% 47% 60% 45% 50% 37% 40% 30% 20% 3% 3% 2% 10% 0% Yes No Unsure Whole sample < $5 million $5 million -$100 million 41
  42. 42. Has the passing of the JOBS Act increased thelikelihood that business owners will raise capital via IPO or has it accelerated plans already in place for an IPO?100% 76% 76% 82%80%60%40% 23% 23% 17%20% 1% 1% 1% 1% 1% 0% 0% Yes - increased Yes - accelerated No Unsure likelihood of an IPO plans already in place for an IPO Whole sample < $5 million $5 million -$100 million 42
  43. 43. Ranking of aspects of JOBS Act (in terms ofperceived cost savings) that have made an IPO exit more appealing100%80% 59%60% 40% 48% 39% 30% 32% 24%40% 18% 12%20% 0% Exempted from Only two years of audited Exempted from Dodd-Frank requirements of hiring an financial statements rules that give shareholders outside auditing firm to required for filing rather non-binding votes on check internal financial than three executive compensation controls Most important Moderately important Least important 43
  44. 44. IX. Financing Conditions by State 44
  45. 45. Sample Size by State Sample Sample Sample State Size State Size State SizeCalifornia 835 Massachusetts 116 Idaho 46Texas 427 Wisconsin 109 Arkansas 42Florida 347 Oregon 101 Montana 37New York 290 Indiana 91 Nebraska 36Illinois 258 Missouri 90 Mississippi 33Pennsylvania 208 Tennessee 90 Maine 31Ohio 199 Connecticut 76 New Hampshire 28Georgia 192 Nevada 76 Alaska 26Virginia 175 Alabama 71 District of Columbia 24Michigan 174 New Mexico 65 Delaware 23Colorado 173 South Carolina 65 Hawaii 23Arizona 170 Utah 65 Rhode Island 20Washington 170 Kansas 61 West Virginia 20New Jersey 164 Louisiana 57 Wyoming 20North Carolina 146 Iowa 55 Vermont 18Maryland 123 Oklahoma 52 South Dakota 17Minnesota 122 Kentucky 48 North Dakota 11 45
  46. 46. Demand for Financing due to Planned Growth by State (% with any need reported) State Rank % State Rank % State Rank %Oklahoma 1 83.7% Texas 18 68.5% Arizona 35 61.9%South Dakota 2 82.4% Virginia 19 67.7% Massachusetts 36 61.8%Delaware 3 80.0% California 20 67.5% Montana 37 61.8%North Dakota 4 80.0% Alabama 21 67.2% Washington 38 61.7%South Carolina 5 77.4% Ohio 22 66.8% Utah 39 61.4%Florida 6 72.6% Michigan 23 66.5% Rhode Island 40 61.1%New Mexico 7 72.1% Indiana 24 66.3% Iowa 41 60.4%Georgia 8 71.8% Colorado 25 66.0% Louisiana 42 60.0%Vermont 9 71.4% Mississippi 26 65.5% Pennsylvania 43 59.7%New Jersey 10 71.2% New Hampshire 27 65.4% Tennessee 44 59.0%Kentucky 11 70.5% Missouri 28 64.6% Oregon 45 58.5%Nevada 12 70.0% Minnesota 29 64.5% Idaho 46 57.9%Wyoming 13 70.0% Connecticut 30 64.2% West Virginia 47 55.6%Kansas 14 69.6% Illinois 31 62.9% Nebraska 48 54.8%District of Columbia 15 69.6% New York 32 62.5% Arkansas 49 51.3%North Carolina 16 69.2% Alaska 33 62.5% Maine 50 48.1%Maryland 17 68.8% Wisconsin 34 62.5% Hawaii 51 42.9% 46
  47. 47. Demand for Financing due to Increased Sales by State (% with any need reported) State Rank % State Rank % State Rank %Delaware 1 73.7% Virginia 18 55.8% Mississippi 35 48.1%North Dakota 2 72.7% Michigan 19 55.7% Indiana 36 47.0%South Dakota 3 70.6% Washington 20 55.3% Montana 37 46.9%South Carolina 4 69.8% Maryland 21 54.6% Arizona 38 46.7%Florida 5 65.8% District of Columbia 22 54.5% Utah 39 46.7%Oklahoma 6 63.8% Massachusetts 23 54.5% Iowa 40 46.2%Nevada 7 62.3% New Jersey 24 54.4% Vermont 41 46.2%Kentucky 8 62.2% Colorado 25 53.5% Nebraska 42 45.5%Texas 9 61.9% Wyoming 26 52.9% Arkansas 43 45.0%Rhode Island 10 61.1% Illinois 27 52.9% Kansas 44 44.4%North Carolina 11 61.0% Minnesota 28 52.7% Alabama 45 44.3%California 12 60.1% Missouri 29 52.6% Maine 46 44.0%Georgia 13 59.9% Wisconsin 30 51.6% Louisiana 47 41.7%New Mexico 14 59.6% Connecticut 31 51.5% Idaho 48 41.0%Ohio 15 57.8% Oregon 32 51.1% Alaska 49 37.5%Tennessee 16 57.6% Pennsylvania 33 50.8% Hawaii 50 36.4%New York 17 56.6% New Hampshire 34 50.0% West Virginia 51 35.3% 47
  48. 48. Percentage Indicating “Yes” to “Is the current business financing environment restricting growth opportunities” by State State Rank % State Rank % State Rank %Nevada 1 75.0% Arizona 18 62.3% Pennsylvania 35 53.7%New Mexico 2 72.6% Illinois 19 62.2% Missouri 36 53.7%Maryland 3 70.5% District of Columbia 20 61.9% West Virginia 37 52.9%Florida 4 70.2% Hawaii 21 61.9% Oklahoma 38 52.1%Virginia 5 68.8% Mississippi 22 61.3% Washington 39 51.3%Delaware 6 68.2% Utah 23 61.0% Kentucky 40 50.0%North Carolina 7 67.7% Indiana 24 60.7% North Dakota 41 50.0%California 8 67.4% Idaho 25 60.0% Iowa 42 48.9%Georgia 9 66.9% Montana 26 60.0% Kansas 43 48.3%South Carolina 10 66.1% Rhode Island 27 60.0% Vermont 44 47.1%New Jersey 11 65.1% Michigan 28 59.8% Tennessee 45 46.3%Alabama 12 64.6% Connecticut 29 58.3% Alaska 46 45.8%Oregon 13 63.5% Louisiana 30 58.3% Arkansas 47 45.7%Wyoming 14 63.2% Maine 31 58.3% Minnesota 48 44.3%Massachusetts 15 63.1% New York 32 57.8% New Hampshire 49 44.0%Texas 16 63.1% Wisconsin 33 56.7% South Dakota 50 43.8%Colorado 17 62.3% Ohio 34 55.2% Nebraska 51 37.5% 48
  49. 49. Percentage Indicating “Yes” to “Is the current business financing environment restricting ability to hire” by State State Rank % State Rank % State Rank %North Dakota 1 66.7% Texas 18 51.2% Kansas 35 44.2%District of Columbia 2 65.0% New York 19 50.8% Oklahoma 36 43.5%South Carolina 3 64.9% Massachusetts 20 50.5% Montana 37 42.4%New Mexico 4 64.8% North Carolina 21 50.4% New Hampshire 38 42.3%Virginia 5 64.0% Arizona 22 50.0% Utah 39 41.8%Nevada 6 63.6% Rhode Island 23 50.0% Michigan 40 41.4%Florida 7 62.4% Louisiana 24 48.9% Missouri 41 40.8%Colorado 8 61.6% Washington 25 48.3% Kentucky 42 40.5%Georgia 9 58.7% Mississippi 26 48.3% Minnesota 43 39.8%Idaho 10 57.9% Ohio 27 47.9% South Dakota 44 37.5%California 11 56.1% Delaware 28 47.6% West Virginia 45 37.5%Maine 12 55.0% Wyoming 29 47.1% Iowa 46 34.0%Maryland 13 54.8% Indiana 30 47.0% Hawaii 47 31.6%Oregon 14 54.4% Wisconsin 31 46.8% Arkansas 48 31.3%Alabama 15 54.1% Tennessee 32 46.4% Vermont 49 30.8%New Jersey 16 52.1% Connecticut 33 44.6% Alaska 50 27.3%Illinois 17 51.4% Pennsylvania 34 44.6% Nebraska 51 26.7% 49
  50. 50. Percentage Indicating Shortened Receivable Payment Periods Over the Past Three Months State Rank % State Rank % State Rank %Idaho 1 19% Arkansas 18 8% West Virginia 35 6%Nebraska 2 19% California 19 8% District of Columbia 36 5%Delaware 3 18% Colorado 20 8% Hawaii 37 5%South Dakota 4 15% Connecticut 21 8% Oklahoma 38 5%North Carolina 5 12% Louisiana 22 8% Oregon 39 5%Maryland 6 11% New Hampshire 23 8% Rhode Island 40 5%Michigan 7 11% New York 24 8% Alaska 41 4%Tennessee 8 11% Texas 25 8% Maine 42 4%Illinois 9 10% Missouri 26 7% Mississippi 43 4%Indiana 10 10% Pennsylvania 27 7% South Carolina 44 4%Kentucky 11 10% Washington 28 7% New Mexico 45 3%Massachusetts 12 10% Arizona 29 6% Utah 46 3%Florida 13 9% Georgia 30 6% Iowa 47 2%New Jersey 14 9% Kansas 31 6% Montana 48 0%Virginia 15 9% Minnesota 32 6% North Dakota 49 0%Wisconsin 16 9% Nevada 33 6% Vermont 50 0%Alabama 17 8% Ohio 34 6% Wyoming 51 0% 50
  51. 51. Percentage Indicating Slowed Receivable Payment Periods Over the Past Three Months State Rank % State Rank % State Rank %Wyoming 1 58% Arizona 18 39% Kansas 35 31%Alabama 2 51% Connecticut 19 39% Texas 36 31%Vermont 3 50% Nevada 20 39% Indiana 37 30%New Hampshire 4 46% New Jersey 21 38% Arkansas 38 29%Louisiana 5 44% New York 22 38% Wisconsin 39 29%Montana 6 44% California 23 37% Maryland 40 28%Oregon 7 44% Georgia 24 36% Michigan 41 28%South Carolina 8 44% Ohio 25 35% Minnesota 42 26%Utah 9 43% West Virginia 26 35% Rhode Island 43 26%New Mexico 10 42% Missouri 27 34% Delaware 44 24%Colorado 11 41% Oklahoma 28 34% Maine 45 24%Hawaii 12 41% Virginia 29 34% Kentucky 46 21%Florida 13 40% Alaska 30 33% North Dakota 47 20%Massachusetts 14 40% Washington 31 33% Iowa 48 19%Mississippi 15 40% Idaho 32 32% Nebraska 49 19%Pennsylvania 16 40% North Carolina 33 32% District of Columbia 50 15%Tennessee 17 40% Illinois 34 31% South Dakota 51 15% 51
  52. 52. Percentage of Respondents Who Attempted toRaise Outside Financing in the Last 6 Months by State State Rank % State Rank % State Rank %North Dakota 1 64% Georgia 18 33% North Carolina 35 30%South Dakota 2 47% Pennsylvania 19 33% Minnesota 36 29%Oklahoma 3 46% Vermont 20 33% Louisiana 37 28%Rhode Island 4 45% Colorado 21 32% Mississippi 38 27%New Hampshire 5 43% Connecticut 22 32% Ohio 39 27%Arizona 6 41% Indiana 23 32% Arkansas 40 26%New Mexico 7 38% Nevada 24 32% Maine 41 26%South Carolina 8 37% Utah 25 32% Michigan 42 26%Massachusetts 9 36% Wisconsin 26 32% West Virginia 43 25%California 10 35% Alabama 27 31% Wyoming 44 25%Hawaii 11 35% Alaska 28 31% Iowa 45 24%New Jersey 12 35% Kentucky 29 31% Kansas 46 23%Virginia 13 35% New York 30 31% Missouri 47 23%Illinois 14 34% Tennessee 31 31% Oregon 48 23%Texas 15 34% Delaware 32 30% Nebraska 49 22%Washington 16 34% Idaho 33 30% Montana 50 19%Florida 17 33% Maryland 34 30% District of Columbia 51 17% 52
  53. 53. Percentage of Owners Who Transferred Personal Assets to Business Over Prior Six Months by State State Rank % State Rank % State Rank %Nevada 1 56% Delaware 18 43% West Virginia 35 37%Wyoming 2 55% Hawaii 19 43% Missouri 36 36%South Carolina 3 54% Minnesota 20 43% Montana 37 35%Colorado 4 50% Washington 21 43% Indiana 38 34%Arizona 5 49% District of Columbia 22 42% Maryland 39 34%Virginia 6 49% Pennsylvania 23 42% Alabama 40 33%Kentucky 7 48% Texas 24 42% Iowa 41 33%New Jersey 8 48% Maine 25 41% New Hampshire 42 32%Oklahoma 9 48% Massachusetts 26 41% Wisconsin 43 32%Florida 10 47% Mississippi 27 41% Michigan 44 29%California 11 46% Connecticut 28 40% Arkansas 45 28%Georgia 12 46% Illinois 29 40% Nebraska 46 28%New Mexico 13 45% Louisiana 30 40% Vermont 47 28%North Dakota 14 45% North Carolina 31 40% Idaho 48 27%New York 15 44% Ohio 32 40% Alaska 49 25%Oregon 16 44% Tennessee 33 38% Kansas 50 24%Utah 17 44% Rhode Island 34 37% South Dakota 51 24% 53
  54. 54. Percentage of Respondents Indicating Demandfor New Financing due to Planned Growth in the Next Six Months by State State Rank % State Rank % State Rank %North Dakota 1 80.0% North Carolina 18 65.1% Alabama 35 55.7%South Carolina 2 78.0% Ohio 19 64.4% Connecticut 36 55.7%South Dakota 3 76.9% Arizona 20 63.9% Idaho 37 55.6%Delaware 4 76.2% Kansas 21 62.7% Utah 38 55.4%Wyoming 5 75.0% Michigan 22 62.6% New Hampshire 39 54.5%Alaska 6 73.9% Colorado 23 62.3% Louisiana 40 54.2%New Mexico 7 71.7% New York 24 62.1% Pennsylvania 41 54.1%Virginia 8 71.5% Indiana 25 61.9% Missouri 42 53.2%Florida 9 71.2% Kentucky 26 61.0% West Virginia 43 52.6%Georgia 10 69.5% Mississippi 27 60.7% Tennessee 44 50.7%District of Columbia 11 68.2% Massachusetts 28 60.6% Arkansas 45 50.0%California 12 67.4% Minnesota 29 59.1% Vermont 46 50.0%Nevada 13 66.7% Washington 30 58.9% Nebraska 47 48.3%Oklahoma 14 66.7% Oregon 31 58.6% Hawaii 48 47.4%New Jersey 15 65.9% Illinois 32 58.4% Rhode Island 49 47.4%Texas 16 65.9% Montana 33 58.1% Iowa 50 39.1%Maryland 17 65.4% Wisconsin 34 56.5% Maine 51 38.5% 54
  55. 55. Percentage of Respondents Indicating Demand for New Financing due to Expected Increased Sales in the Next Six Months by State State Rank % State Rank % State Rank %Delaware 1 75.0% Ohio 18 59.8% Pennsylvania 35 52.2%North Dakota 2 72.7% Maryland 19 59.6% Connecticut 36 51.6%South Carolina 3 71.2% New Jersey 20 59.6% Oregon 37 51.1%Mississippi 4 70.4% North Carolina 21 59.3% Kansas 38 50.9%Oklahoma 5 69.6% Colorado 22 59.3% Nebraska 39 48.4%Florida 6 69.5% New York 23 57.9% Alaska 40 47.6%Virginia 7 65.8% Idaho 24 57.6% Indiana 41 47.6%New Mexico 8 64.3% Minnesota 25 57.5% Alabama 42 47.4%Texas 9 64.0% Arizona 26 55.9% Arkansas 43 47.4%District of Columbia 10 63.6% Washington 27 55.4% Rhode Island 44 44.4%Wyoming 11 63.2% Massachusetts 28 55.2% West Virginia 45 43.8%Nevada 12 62.7% Tennessee 29 54.5% Louisiana 46 43.2%California 13 62.7% Missouri 30 54.4% Vermont 47 42.9%Kentucky 14 61.9% Wisconsin 31 53.8% Hawaii 48 42.1%Georgia 15 61.4% Utah 32 53.7% Montana 49 40.0%South Dakota 16 60.0% Illinois 33 53.2% Iowa 50 38.8%Michigan 17 59.9% New Hampshire 34 52.2% Maine 51 33.3% 55
  56. 56. Percentage of Respondents Planning to HireNew Employees in the Next Six Months by State State Rank % State Rank % State Rank %North Dakota 1 82% Rhode Island 18 70% Colorado 35 65%District of Columbia 2 79% Virginia 19 70% Vermont 36 65%Oklahoma 3 79% Illinois 20 69% Alaska 37 64%Kentucky 4 77% Kansas 21 69% Connecticut 38 64%New Hampshire 5 77% Louisiana 22 69% Mississippi 39 64%New Jersey 6 74% New York 23 69% North Carolina 40 64%Utah 7 74% Texas 24 69% Wisconsin 41 64%Arizona 8 73% California 25 68% Nevada 42 63%Delaware 9 73% Hawaii 26 68% Iowa 43 62%Maryland 10 73% Minnesota 27 68% Massachusetts 44 62%Florida 11 72% Tennessee 28 68% South Dakota 45 62%Georgia 12 72% Washington 29 68% Alabama 46 59%Ohio 13 72% Wyoming 30 68% Nebraska 47 58%Missouri 14 71% Indiana 31 67% Arkansas 48 55%Oregon 15 71% Idaho 32 66% Maine 49 53%Michigan 16 70% New Mexico 33 66% Montana 50 50%Pennsylvania 17 70% South Carolina 34 66% West Virginia 51 37% 56
  57. 57. Percentage of Businesses Who Indicated Slower Business Growth as a Result of UnsuccessfulFinancing Event in the Next Six Months by State State Rank % State Rank % State Rank %Delaware 1 100% Texas 18 77% New York 35 67%Vermont 2 100% Hawaii 19 75% North Dakota 36 67%Arkansas 3 88% Oklahoma 20 75% Wyoming 37 67%Maine 4 83% California 21 74% Kansas 38 64%Missouri 5 83% Virginia 22 74% Maryland 39 64%Arizona 6 82% Illinois 23 73% Michigan 40 64%Florida 7 81% Pennsylvania 24 73% District of Columbia 41 63%North Carolina 8 80% Colorado 25 72% Minnesota 42 63%Indiana 9 79% Ohio 26 70% Iowa 43 60%Nevada 10 79% Massachusetts 27 69% Alabama 44 59%Mississippi 11 78% New Mexico 28 68% Connecticut 45 53%Oregon 12 78% South Carolina 29 68% South Dakota 46 50%Utah 13 78% Tennessee 30 68% West Virginia 47 50%Washington 14 78% Wisconsin 31 68% Kentucky 48 47%Georgia 15 77% Idaho 32 67% New Hampshire 49 44%Louisiana 16 77% Montana 33 67% Alaska 50 36%New Jersey 17 77% Nebraska 34 67% 57
  58. 58. Percentage of Businesses Who Indicated Hiring Fewer Employees as a Result of UnsuccessfulFinancing Event in the Next Six Months by State State Rank % State Rank % State Rank %Mississippi 1 78% Missouri 18 61% Arkansas 35 50%Kentucky 2 73% Washington 19 61% District of Columbia 36 50%Delaware 3 71% Iowa 20 60% Kansas 37 50%Pennsylvania 4 70% New Jersey 21 60% Nebraska 38 50%Tennessee 5 68% Vermont 22 60% West Virginia 39 50%Idaho 6 67% California 23 59% Colorado 40 49%Maine 7 67% Ohio 24 58% Minnesota 41 47%Massachusetts 8 67% Oklahoma 25 58% Alaska 42 45%Montana 9 67% New York 26 57% Utah 43 44%Oregon 10 67% Arizona 27 56% Wisconsin 44 43%Wyoming 11 67% New Hampshire 28 56% Michigan 45 40%Florida 12 65% North Carolina 29 56% South Dakota 46 38%New Mexico 13 64% Maryland 30 55% Alabama 47 35%Georgia 14 63% Nevada 31 55% Connecticut 48 35%Louisiana 15 62% South Carolina 32 55% North Dakota 49 33%Texas 16 62% Virginia 33 54% Hawaii 50 25%Illinois 17 61% Indiana 34 53% 58
  59. 59. X. About the Respondents 59
  60. 60. Details About the Respondents Geographic Location less than or equal to 10 11 - 25 26 - 50 ME WA 51 - 75 76 - 100 ND MN VTNH MT 101 - 125 OR NY MA 126 - 150 WI ID SD MI RI more than 150 WY CT PA IA NJ NE OH NV IL IN MD WV VA UT CO KS MO KY CA NC TN OK AR SC AZ NM MS AL GAHI AK LA TX FL 60
  61. 61. Details About the Respondents Industry Services Construction 2% 2% 5% Manufacturing 3%3% Retail trade3% 28% 5% 6% Information technology or services Wholesale trade 7% 14% Health care 10% Unclassified establishments 12% Finance & real estate Arts, entertainment or recreation Forestry, fishing, hunting or agriculture Educational services Other 61
  62. 62. Details About the Respondents Annual Revenues $0 or pre-revenue stage 1% 2% 2% 2% 4% $1 - $100,000 5% 16% $100,001 - $500,000 6% $500,001 - $1,000,00024% 23% $1,000,001 - $5,000,000 $5,000,001 - $10,000,000 15% $10,000,001 - $25,000,000 $25,000,001 - $50,000,000 $50,000,001 - $100,000,000 $100,000,001 - $500,000,000 More than $500,000,000 62
  63. 63. Details About the Respondents Annual Income Negative (net loss) 2% 3% 5% 13% $0 - $100,000 7% $100,001 - $500,00027% 43% $500,001 - $1,000,000 $1,000,001 - $5,000,000 $5,000,001 - $50,000,000 Greater than $50,000,000 63
  64. 64. Details About the Respondents Firm age Less than 1 year 2% 3%4% At least 1 but less than 2 8%40% At least 2 but less than 3 18% At least 3 but less than 5 25% At least 5 but less than 10 At least 10 but less than 20 20 or more 64
  65. 65. Details About the Respondents Number of Employees 0 1-2 2% 2% 3-5 4% 4% 5% 5% 6-10 26% 5%8% 11-15 16-20 17% 22% 21-30 31-50 51-100 101-200 More than 200 65
  66. 66. About Pepperdine Private Capital Markets ProjectThe Pepperdine Private Capital Markets Project at the Graziadio School ofBusiness and Management is the first simultaneous, comprehensive, and on-goinginvestigation of the major private capital market segments. The research seeks tounderstand the true cost of private capital across market types and the investmentexpectations of privately-held business owners; providing lenders, investors andthe businesses that depend on them with critical data to make optimal investmentand financing decisions, and better determine where the opportunities to createlasting economic value may be realized. Download reports and find moreinformation at http://bschool.pepperdine.edu/privatecapital.About Pepperdine University’s Graziadio School of Business andManagementFounded on the core values of integrity, stewardship, courage, and compassion,Pepperdine University’s Graziadio (GRAT-ZEE-ah-DEE-oh) School of Businessand Management has been developing values-centered leaders and advancingresponsible business practice since 1969. Student-focused, experience-driven, andglobally-oriented, the Graziadio School offers fully accredited top-ranked MBA,Masters of Science, and bachelor’s completion business programs. Moreinformation found at http://bschool.pepperdine.edu/newsroom/. 66
  67. 67. THANK YOU! John K. Paglia, Ph.D., CFA, CPA Associate Professor of FinanceDirector, Pepperdine Private Capital Markets Project http://bschool.pepperdine.edu/privatecapital john.paglia@pepperdine.edu 805.379.5809 67

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