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Private Equity Portfolio Valuation

Portfolio valuations for hedge funds, private equity funds, infrastructure funds, real estate investment trusts, property investment funds and other alternative investment funds in accordance with; AIFM Directive, Hedge Fund Standards Board, Private Equity Provisions of the CFA Institute’s Global Investment Performance Standards (GIPS),Private Equity Industry Guidelines Group (PEIGG) and European Private Equity  and Venture Capital Association (EVCA)

Value Added to Stakeholders

 Existing Investors

  • Provides consistent, transparent information to monitor fund investments
  • Increased focus on fund managers who demonstrate Fair Value best practices
  • Allows investors to calculate their own performance

 Prospective Investors

  • Awareness and requirements for robust valuations are increasing
  • Investors are often willing to bear valuation and monitoring expenses
  • GAAP (including Fair Value) is a standard requirement in fund agreements

Deal Teams

  • Encourages consistent analysis and documentation
  • Efficiently provides Fair Value assessments to other stakeholders
  • Helps to create meaningful internal position monitoring and valuation reporting support

 

 

Fund Managers

  • Provides additional, focused information to monitor portfolios regularly
  • Supports review of valuations with deal teams and investors
  • Ensures appropriate fund-level governance 

Reporting Teams

  • Provides independent Fair Value assessments on portfolio investments
  • Demonstrates best-practice valuation standards by the fund
  • Assists reporting teams in creating internal valuations that are consistent, credible and fully compliant with GAAP

Auditors

  • Makes interim and year-end auditing more efficient
  • Provides independent review of valuation assessments
  • Reduces the use of auditor valuation resources

 

Portfolio Valuation: Service Options
 
 
Range of Value
 

Opinion - a range of estimated fair values for the subject company

  • Data obtained from the fund manager
  • Direct contact with management of the subject company
  • Generally includes due diligence meeting
  • Valuation approaches used are based on the data available to, and provided by, the fund manager


Full-Scope Valuation

Opinion - a Fair Value point estimate

  • Scope similar to the due diligence process for an acquisition
  • Includes due diligence visit  with the subject company’s senior management, and division/product leaders
  • Data is obtained directly from the subject company’s management
  • All relevant valuation approaches considered
 

 


Negative Assurance

Opinion - that the fund manager’s mark is “not unreasonable”

  • Data obtained from the fund manager
  • No direct contact with the management of the subject company
  • Due diligence meetings are rare
  • Valuation deemed reasonable based on the fund manager’s analysis


Positive Assurance

Opinion - that the fund manager’s mark is “reasonable”

  • Data obtained from the fund manager
  • May include direct contact with management of the subject company
  • May include due diligence meeting
  • Valuation deemed reasonable based on the fund manager’s analysis