Responding to the continued need for more consistency and
transparency in private equity valuations and taking into account
Statement No. 157, Fair Value Measurements, issued by the Financial
Accounting Standards Board in September of 2006, the Private Equity
Industry Guidelines Group has updated its U.S. Private Equity
Valuation Guidelines. The Updated Guidelines assist private equity
participants in complying with U.S. Generally Accepted Accounting
Principles which require fair value reporting. The Updated Guidelines
along with a Frequently Asked Question document may be found at
www.peigg.org.
"The release of the Update Guidelines represents an important step
in the continued evolution of the private equity industry and they
will help managers value investments in a consistent and transparent
manner," said PEIGG member Stephen Holmes of InterWest Partners, a
diversified venture capital firm that invests in information
technology and life science companies.
The Guidelines are designed to promote best practices and to
improve the consistency and relevancy of valuation information
reported to investors--an objective that is of increasing importance
to the private equity industry as a whole. "Private Equity Investments
by their nature are difficult to monitor," said PEIGG member Kevin
Delbridge of HarbourVest, one of the nation's leading private equity
fund of fund managers. "To evaluate manager performance on an interim
basis, to make manager selections and to make asset allocation
decisions, we need results reported on a common basis. Fair Value as
outlined in the Guidelines, provides that consistent basis."
The issuance of FASB Statement No. 157 has again highlighted the
importance of comparable valuation data. "Private Equity investors,
that prepare financial statements in accordance with U.S. GAAP, must
report and record their investments at fair value," said PEIGG member
David Larsen of Duff & Phelps, a leading independent financial
advisory firm that specializes in portfolio investment valuation for
private equity firms and hedge funds. "Therefore, they need fair value
information from their managers. In addition, most private equity
partnership agreements require financial statements be prepared in
accordance with GAAP, which requires fair value. The Guidelines are a
great tool for the private equity community enabling managers to be
compliant with Statement No. 157 while taking into account nuances in
the private equity industry."
The Updated Guidelines are conceptually in harmony with the
International Private Equity and Venture Capital Valuation Guidelines
issued in late 2005. PEIGG believes that managers who follow the
Guidelines will be compliant with GAAP.
About PEIGG
The Private Equity Industry Guidelines Group was formed in
February 2002, and is comprised of a volunteer group of industry-wide
representatives who have come together to debate and establish a set
of reporting guidelines for the industry. Its mission is to promote
increased reporting consistency and transparency while at the same
time improving operating efficiency in the transfer of information
among market participants by establishing a set of standard Guidelines
for the content, formatting and delivery of information. The Group is
believed to be the first broad-based alliance, comprised of general
partners, limited partners and service providers participating in both
the venture and buyout segments of the private equity industry in the
U.S. and overseas. For more information visit www.peigg.org.
