GLOBAL - IPEV publishes updated valuations guidelines

rikke
09 September 2009

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The International Private Equity and Venture Capital Valuation (IPEV) Board published its updated version of the Private Equity Valuations Guidelines today. Significantly, the updated version highlights the importance of consistency with international accounting standards, such as the US GAAP and the IFRS.

Among the changes introduced in the updated version are a clarification on how to apply the marketability discount; and guidance on valuation of interest in funds.

Additionally, with the respect 'Price of Recent Investment' the new guideline eliminate any reference to the one year period used in practice for retaining investments at the 'Price of Recent Investment' concept. The new version also includes a additional guidelines on how incorporate additional milestone analysis into this concept.

The IPEV Board chairman expressed in a statement that the fair value remain IPEV's recommended valuations tool to monitor portfolio and make asset allocation decisions. Fair value of unlisted companies according the IPEV Guidelines, is the market price the asset could obtain at reporting date were it to be sold. IPEV expects to provide further updates as US GAAP and IFRS standards on fair value change.