BVCA recommends increased valuation transparency

The BVCA chairman, Michael Queen, has led anindustry review which includes radicalrecommendations to the way in which firms valuetheir portfolios. Queen, mindful of attracting pensionfunds into private equity, says increasingtransparency will present a potential advantage tothe UK private equity industry . Central to the newguidelines is the concept of fair value, the amount forwhich an asset can be exchanged betweenknowledgeable parties, with the introduction of newrigour in valuing unlisted assets. BVCA memberscan submit comments to a consultation on theproposals, choosing between several options forvaluations, including earnings multiples, the price ofrecent third party investments, and companies netassets.

Meanwhile, reports indicate that investors havebecome so disenchanted with biotech companiesthat these companies cash values now exceed theirmarket capitalisation.

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