The IPEV Valuation Guidelines are reviewed and updated periodically by the IPEV Board to incorporate changes to accounting standards and to ensure they continue to reflect best practice when valuing investments.
The Valuation Guidelines were last updated in 2018 as part of the triennial review process. In 2020, the IPEV board also published guidance during the COVID-19 pandemic setting out areas to consider during periods of significant uncertainty.
The IPEV Board has started the 2021 review process and expects to publish the final revised guidelines in Q2 2022. The slight extension to the timeline is to incorporate changes proposed by FASB to ASC Topic 820 (US GAAP) which would eliminate the ability to take a discount on a contractually restricted security (such as an underwriter’s lockup). The FASB’s proposals are in the consultation phase and the IPEV Board will wait until the changes are finalized before amending the guidelines
For the 2021 review, the IPEV Board has issued a general call for feedback as it is not expecting to make significant changes to the guidelines. The IPEV Board proposes to incorporate:
– the guidance provided during the COVID-19 pandemic;
– further guidance on the valuation of early-stage venture investments and the calibration to the price of recent investment/funding rounds at each measurement date;
– changes made to ASC Topic 820, highlighting any differences to IFRS 13; and
– other feedback following the continued experience of industry practitioners applying IFRS 13 and ASC Topic 820.
The current Valuation Guidelines will continue to apply in the meantime.
The IPEV board would welcome feedback on the above by 28 January 2022 and is keen to engage with respondents during the consultation process.
UPDATE 12 July 2022: The FASB recommended guidance to ASC Topic 820 was published on the 30th of June 2022. The IPEV board will - as previously decided - take this guidance under consideration and expects to publish final revised IPEV guidelines in Q4 2022.
Notes to editors
1. The IPEV Board and Valuation Guidelines
The mission of the IPEV Board is to provide high quality, uniform, globally acceptable, best practice guidance for private capital valuation purposes.
The IPEV Board was created as an independent body in 2005 and is responsible for maintaining, promoting, monitoring and updating the IPEV Valuation Guidelines. The Board has an advisory role and gives guidance on the application of the Guidelines to all stakeholders in the private equity and venture capital industry including practitioners, investors, regulators and auditors. More information about the IPEV Board can be found here.
2. Consultation process
The call for feedback is due by 28 January 2022. Please send your response to [email protected].