UK - GMG recommends change to Walker guidelines

Section V.3 of the guidelines currently defines a portfolio company as "a UK company acquired by one or more private equity firms in a public to private transaction in excess of £300m, or a secondary or other non-market transaction in excess of £500m, which generates more than 50% of revenues in the UK and has 1,000 or more full-time UK employees".

The amendment would see the value thresholds left unchanged, but applied to businesses that generate more than 50% of revenue in the UK or that have 1,000 or more full-time employees. The BVCA has accepted the change and will be implementing the recommendation in its next round of reporting.

Though the change seems slight, it will inevitably mean that more companies will qualify under the guidelines, a move that should be welcomed by critics that have said the guidelines are too narrow. The GMG is also considering whether the £500m threshold should be lowered and will consult with the private equity industry in respect to this decision until summer 2009.

This, though, could turn out to be largely irrelevent if the draft proposals from the EU Commission are fully adopted. The current assumption is that the new regulation would require full disclosure from companies with turnover in excess EUR 50m, or a balance sheet total in excess of EUR 43m.

The Walker Guidelines were established in November 2007 by Sir David Walker to ensure adequacy and transparency in the private equity industry.

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