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IPEV Board publishes draft amendments to the International Private Equity and Venture Capital Valuation Guidelines

The International Private Equity and Venture Capital Valuation Guidelines Board (“the IPEV Board”) has published draft amendments to the International Private Equity and Venture Capital Valuation Guidelines for consultation.  

 

The IPEV Valuation Guidelines are reviewed periodically by the IPEV Board to ensure they continue to promote best practice when valuing investments and to incorporate changes to accounting standards.  The Valuation Guidelines were last updated in 2015 and this year’s update reflects the continued experience of industry practitioners applying IFRS 13 and ASC Topic 820 (US GAAP) as well as incorporating other valuation guidance such as that reflected in the working draft of the American Institute of Certified Public Accountants Private Equity and Venture Capital Valuations Guide.

 

 

 

 

 

Key Enhancements include:

 

A. Price of a Recent Investment removed as a Valuation Technique to reinforce the premise that Fair Value must be estimated at each Measurement Date.

 

B. Valuation considerations for early-stage Investments expanded.

 

C. Valuing Debt as an Investment expanded.

 

D. To prevent misunderstanding and highlight applicability to various types of private Investments in Debt and Equity by various types of Investment Companies/Entities the term “private equity” was replaced with the term “Private Capital.”

 

E. For better readability and to eliminate confusion, Section I: Valuation Guidelines was moved to Appendix 1.  Section I of the 2018 edition of the Valuation Guidelines presents the Valuation Guidelines, boxed and shaded, with explanatory comments.  Appendix 1 presents the Valuation Guidelines without explanatory comments.

 

The Board would like readers’ input as to whether this format is better or if another format would enhance usability.

 

 

Consultation process:

 

To access the draft amendments to the IPEV Valuation Guidelines, please click here. Comments on the consultation questions, as well as general feedback, is requested by November 27, 2018.  Please send your response to contact@privateequityvaluation.com.

 

The draft amendments of the International Private Equity and Venture Capital Guidelines is available here.