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2015 update to the International Private Equity and Venture Capital Valuation Guidelines

In 2015 the IPEV Board consulted on amendments the International Private Equity and Venture Capital Valuation Guidelines. The IPEV Board periodically updates the IPEV Valuation Guidelines to give effect to changes in accounting standards and enhancements in best practice. The last revision to the IPEV Valuation Guidelines was in December 2012. With three years of experience applying IFRS 13, and with continued experience applying ASC Topic 820, it was deemed appropriate to update the IPEV Valuation Guidelines at this time.

 

The IPEV Board is grateful for all of the comments received as part of the consultation process. The Board carefully considered the feedback submitted and has incorporated certain suggestions where it was deemed appropriate. In response to some of the comments received, the IPEV Board plans to update the FAQs section of this website in the New Year. The Board would be happy to discuss the updates and the process further and please email contact@privateequityvaluation.com with your comments.

 

 

 

 

 

This 2015 edition includes the following changes from the 2012 edition:

 

  1. Clarifying edits made to improve readability and reduce potential confusion:

            a. Minor edits made throughout the document to improve readability and clarity of understanding.

            b. Deleted reference to the IPEV Investor Reporting Guidelines as the responsibility for Reporting Guidelines has reverted back to Invest Europe

                (formerly the European Private Equity & Venture Capital Association).

            c. Addition of Section II subheadings to improve readability.

 

  2. Technical Clarifications:

            a. Update on IASB Unit of Account Progress

            b. Added new guideline 1.6 to emphasize the need for consistency.

            c. Modified footnote 4 of guideline 2.4 to clarify how to consider the value of debt for purposes of determining the value of equity.

            d. Minor edits to guideline 2.2, 2.4 (iii) & 2.6 to improve understandability.

            e. Added new guideline 2.7 to describe backtesting.

            f. Added new guideline 3.2 (ii) to clarify valuation techniques.

            g. Guideline 3.4 reworded to differentiate between earnings multiples and revenue multiples.

            h. Guidelines 3.5 through 3.9 reordered to improve the logical flow.

            i. Removed the negative bias towards DCF and highlighted accounting guidance with respect to considering the number of valuation

               techniques.

            j. Section II clarifying edits and expanded discussion of changes in valuation techniques, calibration, backtesting and the use of multiples

            k. Specific Considerations expanded to include:

                         i. 5.10 Non-control minority positions

                        ii. 5.11 Mathematical Models (guidance updated)

                       iii. 5.12 Sum of the Parts

The 2015 edition of the International Private Equity and Venture Capital Valuation Guidelines is available here.