130301 IPEV Valuation Guidelines Ed December 2012

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International Private Equity and Venture Capital Valuation Guidelines l Edition December 2012

Edition December 2012

InternationalPrivate Equity and Venture CapitalValuation Guidelines




For urther inormation please visit: www.privateequityvaluation.com

Disclaimer

Te inormation contained within this paper has been produced with reerence to the contributions

o a number o sources. Te IPEV Board has taken suitable steps to ensure the reliability o theinormation presented.

However, the IPEV Board nor other named contributors, individuals or associations can acceptresponsibility or any decision made or action taken, based upon this paper or the inormation

provided herein.

For urther inormation please visit: www.privateequityvaluation.com




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Contents

Page

Preace 5

Introduction 6

Financial Reporting Standards 7

Unit o Account 8

Valuation Standards 9




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Page

Section I: Valuation Guidelines 12

Section II: Explanatory Comments - Measuring Fair Value 181. Te Concept o Fair Value 19

2. Principles o Valuation 19

3. Valuation Methods 23

3.1. General 23

3.2. Selecting the Appropriate Valuation echnique 24

3.3. Price o Recent Investment 25

3.4. Multiples 27

3.5. Net Assets 30

3.6. Discounted Cash Flows or Earnings (o Underlying Business) 31

3.7. Discounted Cash Flows (rom the Investment) 32

3.8 Industry Valuation Benchmarks 33

3.9. Quoted Instruments 33

4. Valuing Fund Interests 34

4.1. General 34

4.2. Adjustments to Net Asset Value 35

4.3. Secondary ransactions 36

4.4 Discounted Cash Flows 36

Section III: Application Guidance 38

5. Specic Considerations 39

5.1. Insider Funding Rounds 39

5.2. Distressed Market 39

5.3. Deducting Higher Ranking Instruments 40

5.4. Bridge Financing 40

5.5. Mezzanine Loans 40

5.6. Rolled up Loan Interest 41

5.7. Indicative Oers 41

5.8. Impacts rom Structuring 42

5.9. Contractual Rights 42

5.10. Mathematical Models 43

Denitions 44

Endorsing Associations 48



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Preace

The International Private Equity and Venture Capital Valuation (IPEV) Guidelines (‘Valuation

Guidelines’) set out recommendations, intended to represent current best practice, on the

valuation o private equity investments. The term “private equity” is used in these Valuation

Guidelines in a broad sense to include investments in early stage ventures, management

buyouts, management buyins, inrastructure, mezzanine debt and similar transactions and

growth or development capital.

The Valuation Guidelines, as presented in Section I, are intended to be applicable across the

whole range o Private Equity Funds (seed and start-up venture capital, buyouts, growth/

development capital, etc.) and nancial instruments commonly held by such Private Equity

Funds. They also provide a basis or valuing investments by other entities, including Fund-o-Funds, in such Private Equity Funds. The Valuation Guidelines have been prepared with the goal

that Fair Value measurements derived when using these Valuation Guidelines are compliant with

both International Financial Reporting Standards (IFRS) and United States Generally Accepted

Accounting Principles (US GAAP). Other jurisdictions that use a similar denition o Fair Value,

such as “willing buyer and willing seller” may also nd these Valuation Guidelines applicable.

Individual Valuation Guidelines are outlined in Section I. Section II presents the Valuation

Guidelines themselves surrounded by a border and set out in bold type, with accompanying

explanations, illustrations, background material, context and supporting commentary, to assist

in the interpretation o the Valuation Guidelines. Section III provides application guidance or

specic situations.

Where there is confict between the content o these Valuation Guidelines and the requirements

o any applicable laws or regulations or accounting standard or generally accepted accounting

principles, the latter requirements should take precedence.

No member o the IPEV Board, any committee or working party thereo can accept any

responsibility or liability whatsoever (whether in respect o negligence or otherwise) to any

party as a result o anything contained in or omitted rom the Valuation Guidelines nor or the

consequences o reliance or otherwise on the provisions o these Valuation Guidelines.

These Valuation Guidelines should be regarded as superseding previous 2009/2010 Valuation

Guidelines issued by the IPEV Board with eect or reporting periods post 1 January 2013.



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Te increasing importance placed by

international accounting authorities on FairValue reinorces the need or the consistent

use o valuation practices worldwide and these

Valuation Guidelines provide a ramework orconsistently determining valuations or the type

o Investments held by Private Equity Funds.

Private Equity Funds are typically governed by

a combination o legal or regulatory provisionsor by contractual terms. It is not the intention

o these Valuation Guidelines to prescribe orrecommend the basis on which Investments areincluded in the accounts o Funds. Te IPEV

Board conrms Fair Value as the best measure

o valuing private equity portolio companiesand investments in Private Equity Funds. Te

board’s support or Fair Value is underpinned by

the transparency it aords investors in Funds, which use Fair Value as an indication o the

interim perormance o a portolio. In addition,

institutional investors require Fair Value tomake asset allocation decisions, and to produce

nancial statements or regulatory purposes.

Te requirements and implications o global

nancial reporting standards and in particularIFRS and US GAAP have been considered in the

preparation o these Valuation Guidelines. Tis

has been done, in order to provide a ramework or Private Equity Funds or arriving at a Fair

Value or Investments which is consistent withaccounting principles.

Financial reporting standards do not require

that these Valuation Guidelines be ollowed.However while Valuers must conclude

themselves whether or not their Fair Value

measurements are compliant with relevantnancial reporting standards, measuring Fair

Value in compliance with relevant nancialreporting standards can be achieved by ollowing

these Valuation Guidelines.

Tese Valuation Guidelines are intended to

represent current best practice and thereore willbe revisited and, i necessary, revised to reectchanges in regulation or accounting standards.

Tese Valuation Guidelines are concerned withvaluation rom a conceptual, practical, and

investor reporting standpoint and do not seek

to address best practice as it relates to internalprocesses, controls and procedures, governance

aspects, committee oversights, the experience

and capabilities required o the Valuer or theaudit or review o valuations.

A distinction is made in these Valuation

Guidelines between the basis o valuation (Fair

Value), which denes what the carrying amountpurports to represent, a valuation technique

(such as the earnings multiple technique), which

details the method or technique or deriving a valuation, and inputs used in the valuation

technique (such as EBIDA).

IntroductionPrivate equity managers may be required to carry out periodic valuations o

Investments as part o the reporting process to investors in the Funds they

manage. The objective o these Valuation Guidelines is to set out best practice

where private equity Investments are reported at ‘Fair Value’ and hence helping

investors in Private Equity Funds make better economic decisions.




International Private Equity and Venture Capital Valuation Guidelines l Edition December 2012 7

Private equity by its nature utilizes condential,

non-public inormation. Yet Investors inPrivate Equity Funds need sufcient, timely,

comparable and transparent inormation rom

their Managers which allows Investors to:

• Exercise duciary duty in monitoring

deployed investment capital

• Report periodic perormance to ultimate

Investors, beneciaries, boards, etc.,

as applicable

• Prepare nancial statements consistent

with applicable accounting standards.

Investors may also use the Fair Value

inormation to:

• Make asset allocation decisions

• Make manager selection decisions

• Make Investor level incentive compensationdecisions.

Readers should note that these Valuation

Guidelines address nancial valuation issues only.Te IPEV Board, ater thorough discussion and

consultation, has concluded that matters relating

to the reporting and evaluation o non-nancialactors or inputs in the context o a Fund’s

responsible investment practices, including environmental, social and governance actors,

are conceptually included in these Valuation

Guidelines where their impact is nancial, butare otherwise outside the scope o this document.

Te IPEV Board has prepared separate InvestorReporting Guidelines. Te IPEV Investor

Reporting Guidelines (IRG) are a globally

applicable set o disclosure principles andpractices designed to provide general partners

and their limited partners with guidance in

reporting their investments and investmentperormance over the lie o a und.

The IPEV IRG may be obtained at:

http://www.privateequityvaluation.com/

ipev-board/reporting-guidelines/

ipev-reporting-guidelines/index.html.



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Financial Reporting

StandardsUnited States and International nancial reporting

standards (used interchangeably with accounting

standards) were amended in 2011 resulting in a common denition1 o Fair Value and a

common approach to measuring Fair Value. Other

jurisdictions use a denition o Fair Value which issubstantially similar with US GAAP, IFRS and the

denition used in these Valuation Guidelines.

Te measurement o Fair Value under US

GAAP and IFRS is dictated by Accounting

Standards Codifcation (ASC) opic 820, Fair

Value Measurement as issued by the Financial

Accounting Standards Board (FASB), andIFRS 13, Fair Value Measurement as issued by

the International Accounting Standards Board

(IASB). Other accounting standards dictate when Fair Value is required or permitted. In the

United States, FASB ASC opic 946, Investment Companies requires assets o Investment

Companies to be reported at Fair Value.

Various IFRS require or permit certain nancialinstruments to be reported at Fair Value.

On October 31, 2012, the IASB amended IFRS10, 12 and 27 such that IFRS now requires

“control” investments held by investmententities to be reported at Fair Value rather than

being consolidated at cost.

Tese Valuation Guidelines are ocused on

the consistent measurement o Fair Value.

Other accounting concepts such as disclosurerequirements or day-one gains/losses are beyond

the scope o these Valuation Guidelines.

1 Fair Value is dened by US and International accounting standards as: “the price that would be received to sell an asset or paid to transer a liability in an orderly transaction between market participants at the measurement date.” IFRS 13 paragraph 9, ASC opic 820-10-15-5. Tese Valuation

Guidelines ocus on Fair Value measurement rom a Private Equity Fund perspective which generally ocuses on underlying portolio investments,e.g. assets, and thereore or ease o drating do not ocus on the “or paid to transer a liability” portion o the accounting denition.

2 Te international accounting guidance or private equity investments is contained in IFRS 9, Financial Instruments, IFRS 10, Consolidated FinancialStatements, IAS 27, Consolidated and Separate Financial Statements, IAS 28, Investments in Associates, and IAS 40, Investment Property. IFRS 9 replacedIAS 39 Financial Instruments: Recognition and Measurement, however as IFRS 9 is not yet eective, these Valuation Guidelines apply equally to IAS 39.

Unit o AccountUS and International nancial reporting standards require the Fair Value o an asset

to be measured consistently with the level o

aggregation (Unit o Account) dictated by theaccounting standard requiring or permitting its

measurement at Fair Value (or example, ASC

opic 946, Investment Companies , in the UnitedStates or internationally IFRS 9 and 10, and

International Accounting Standard (IAS) 27,28, 39 and 40).2 Te Unit o Account is a level

o aggregation concept that was developed or

nancial reporting purposes (that is, it addressesthe way in which assets and liabilities are to

be aggregated or disaggregated in the nancial

statements).

Because nancial reporting is meant to portray

economic phenomena, the Unit o Accountattempts to describe the specic way that an

investment is owned, including the legal rights

and obligations o ownership and its relationshipto other ownership rights in a complex capital

structure. However, actual transactions may not

and do not actually have to take place at the Unito Account level specied by accounting standards.

Fair Value measurement guidance articulated in

both ASC opic 820 and IFRS 13 states: “An

entity shall measure the Fair Value o an asset

or liability using the assumptions that MarketParticipants would use when pricing the asset

or liability, assuming that Market Participantsact in their economic best interest.”3 Neither

ASC opic 820 nor IFRS 13 speciy the Unit o

Account or assets or liabilities, but rely on otheraccounting standards to do so.



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3 IFRS 13 paragraph 22; ASC opic 820 paragraph 820-10-35-9.

In US GAAP, ASC opic 946 species that

an investment company must measure its

investments in debt and equity securities at

Fair Value. An entity then reers to ASC opic820 or Fair Value measurement guidance. In

the absence o more specic Unit o Accountguidance rom ASC opic 946, entities measure

the Fair Value o their debt and equity securities

consistently with how Market Participants would act in their economic best interest.

In IFRS, the recent revisions to IFRS 10 state thatthe Fair Value o controlled investments held by

investment entities should be measured at air valuethrough prot or loss in accordance with IFRS 9.

IAS 27 and IAS 28 also permit certain entities to

measure their Investments at Fair Value throughprot or loss in accordance with IFRS 9. IFRS

9 then reers to IFRS 13 or specic Fair Value

measurement guidance. IFRS 9 appears to requirethe Unit o Account o a nancial instrument to be

assessed as a single or individual share. Although a

single share Unit o Account interpretation applies

to actively traded securities (see Section I paragraph3.9 o these Valuation Guidelines), there are

dierent interpretations o the Unit o Account ornon-actively traded securities:

• One interpretation is that because IFRS 10and IAS 28 reer to measuring Fair Value in

accordance with IFRS 9, the Unit o Account

is determined by IFRS 9 and is a single share.However, actual transactions or non-actively

traded securities rarely take place on a single

share basis.• Another interpretation is that the Unit o

Account is determined by IFRS 10, IAS 27

and IAS 28 as the “Investment”, which is notnecessarily a single share. Tis interpretation

more ully matches how Market Participants

transact.

While it is important that a Fund’s auditors agree with management’s conclusion on the Unit o

Account, management must take responsibility

or the accounting conclusions reached, including

the appropriate Unit o Account. I there are

any urther discussions or decisions by the

IASB or the FASB on this issue, these Valuation

Guidelines will be updated accordingly.

Because private equity transactions typically donot happen or individual shares, these Valuation

Guidelines do not address how to value a single

share o a non-actively traded security. In theabsence o Unit o Account guidance to the

contrary, these Valuation Guidelines have been

prepared with the premise that the Fair Valuemeasurement should be consistent with how

Market Participants would transact in theireconomic best interest.

As the Unit o Account concept must be judgementally applied, in the absence o specic

guidance, we oer the ollowing examples

to help clariy how such judgments may bereached:

• Some private equity managers invest in

multiple securities or tranches o the same

portolio company. Unit o Account wouldbe expected to be determined on the same

basis that Market Participants (willing buyersand sellers) would enter into an Orderly

ransaction. I Market Participants would beexpected to purchase all positions in the same

underlying portolio company simultaneously,

then, Fair Value would be measured orthe aggregate investment in the portolio

company. I individual tranches o securities

would be purchased by Market Participantsindividually, then the Unit o Account and the

basis or determining Fair Value would be the

individual tranche.

• I a Fund only holds a debt instrument within

a portolio company’s capital structure, the

Unit o Account would be the individual debtinstrument and the Fair Value o the debt

instrument would be measured using theperspective o a Market Participant and would

include cash ow (coupon payments), risk,

and time to expected principal repayment.



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• I a Fund holds both debt and equity

Investments in the same portolio company

and Market Participants would transact

separately, purchasing a debt positionindependently rom an equity position, then

Unit o Account and Fair Value would bemeasured separately or the debt and equity

positions.

• I a potential Market Participant buyer wouldor could purchase individual shares o an

interest in a private company, then the Unit

o Account may be a single share. However,generally in the Private Equity industry,

Market Participants purchase a meaningulownership interest in a private company, by

acquiring more than single private shares.

Generally it is appropriate to use the value o an

entire Enterprise (business) as a starting point

or measuring Fair Value i Market Participants would use such an approach regardless o the

accounting Unit o Account. Tis is because

private equity investors oten invest in-concert

with one another and realise value only whenthe entire Enterprise is sold. Further, private

equity returns are usually proportionate to theequity position held. Tereore, the hypothetical

sale o an Enterprise is a undamental premiseused by Market Participants to determine Fair

Value. Common adjustments necessary to

allocate Enterprise Value on a Unit o Accountbasis to measure Fair Value are discussed in these

Valuation Guidelines.

Te above discussion o Unit o Account is

or inormational purposes and represents

the IPEV Board’s interpretation o relevantaccounting standards in the context o how

Market Participants transact in the private

equity industry. Ultimately, Unit o Account judgements are a matter or the Fund as

conrmed by the Fund’s auditor.

Valuation StandardsGlobal Valuation Standards continue toevolve. Te IPEV Board has entered into an

understanding with the International Valuation

Standards Council (IVSC) with the objectiveo promoting consistency between the IPEV

Board’s Valuation Guidelines and the IVSC

International Valuation Standards (IVSs)and to enable these Valuation Guidelines

to be positioned as providing sector specicapplication guidance o the principles in IVSs.

A valuation o private equity investments

prepared in accordance with the IVSs andollowing the Valuation Guidelines will be

consistent with the requirements o applicable

nancial reporting standards and will alsomaximise Investor’s trust and condence.

Further inormation about the IVSC,

the IVSs and the IVSC Code o Ethical

Principles or Proessional Valuers isavailable at http://www.ivsc.org/.



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Section I: Valuation Guidelines



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1. The Concept o

Fair Value1.1. Fair Value is the price that would

be received to sell an asset in an Orderly

ransaction between Market Participants at theMeasurement Date.

1.2. A Fair Value measurement assumes that a hypothetical transaction to sell an asset takes

place in the Principal Market or in its absence,

the Most Advantageous Market or the asset.

1.3. For actively traded (quoted) Investments,available market prices will be the exclusive basis

or the measurement o Fair Value or identical

instruments.

1.4. For Unquoted Investments, the

measurement o Fair Value requires the Valuer toassume the Underlying Business or instrument

is realised or sold at the Measurement Date,appropriately allocated to the various interests,regardless o whether the Underlying Business

is prepared or sale or whether its shareholders

intend to sell in the near uture.

1.5. Some Funds invest in multiple securitiesor tranches o the same portolio company.

I a Market Participant would be expected to

transact all positions in the same underlying

Investee Company simultaneously, or exampleseparate investments made in series A, series

B, and series C, then, Fair Value would beestimated or the aggregate Investments in the

Investee Company. I a Market Participant

would be expected to transact separately, orexample purchasing series A, independent rom

series B and series C, or i debt Investments

are purchased independent o equity, then FairValue would be more appropriately determined

or each individual nancial instrument.

2. Principles o

Valuation2.1. Te Fair Value o each Investment should beassessed at each Measurement Date.

2.2. In estimating Fair Value or an Investment,the Valuer should apply a technique or techniquesthat is/are appropriate in light o the nature, actsand circumstances o the Investment in the contexto the total Investment portolio and shoulduse reasonable current market data and inputs

combined with Market Participant assumptions.

2.3. Fair Value is estimated using the perspective o Market Participants and market conditions at theMeasurement Date irrespective o which valuationtechniques are used.

2.4. Generally, or Private Equity, MarketParticipants determine the price they will pay orindividual equity instruments using Enterprise

Value estimated rom a hypothetical sale o theInvestee Company, as ollows:(i) Determine the Enterprise Value o the Investee

Company using the valuation techniques;(ii) Adjust the Enterprise Value or actors

that a Market Participant would take intoaccount such as surplus assets or excessliabilities and other contingencies andrelevant actors, to derive an AdjustedEnterprise Value or the Investee Company;

(iii) Deduct rom this amount any nancialinstruments ranking ahead o the highestranking instrument o the Fund in a saleo the Enterprise scenario (e.g. the amountthat would be paid4) and taking intoaccount the eect o any instrument thatmay dilute the Fund’s Investment to derivethe Attributable Enterprise Value;

(iv) Apportion the Attributable Enterprise Valuebetween the company’s relevant nancial

instruments according to their ranking;(v) Allocate the amounts derived according to the Fund’s holding in each nancialinstrument, representing their Fair Value.



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2.5. Because o the uncertainties inherent in

estimating Fair Value or private equity Investments,

care should be applied in exercising judgement and

making the necessary estimates. However, the Valuershould be wary o applying excessive caution.

2.6. When the price o the initial investment in

an Investee Company or instrument is deemed

Fair Value (which is generally the case i theentry transaction is considered Orderly 5), then

the valuation techniques that are expected to be

used to estimate Fair Value in the uture shouldbe evaluated using market inputs as o the date

the investment was made. Tis process is knownas Calibration. Calibration validates that the

valuation techniques using contemporaneous

market inputs will generate Fair Value atinception and thereore that the valuation

techniques using market inputs as o each

subsequent Measurement Date will generate FairValue at each such date.

3. Valuation Methods3.1. General3.1 (i) In determining the Fair Value o anInvestment, the Valuer should use judgement.

Tis includes consideration o those specic terms

o the Investment which may impact its FairValue. In this regard, the Valuer should consider

the economic substance o the Investment, whichmay take precedence over the strict legal orm.

3.1 (ii) Where the reporting currency o the

Fund is dierent rom the currency in which

the Investment is denominated, translation into

the reporting currency or reporting purposesshould be done using the bid spot exchange rate

prevailing at the Measurement Date.

3.2. Selecting the Appropriate

Valuation TechniqueTe Valuer should exercise their judgement toselect the valuation technique or techniques

most appropriate or a particular Investment.

3.3. Price o Recent InvestmentIn applying the Price o Recent Investmentvaluation technique, the Valuer uses the

initial cost o the Investment itsel, excluding

transaction costs6, or, where there has beensubsequent investment, the price at which a

signicant amount o new Investment into thecompany was made, to estimate the Enterprise

Value, but only i deemed to represent Fair

Value and only or a limited period ollowing the date o the relevant transaction. During the

limited period ollowing the date o the relevant

transaction, the Valuer should in any case assessat each Measurement Date whether changes or

events subsequent to the relevant transaction

would imply a change in the Investment’s FairValue.

4 Some Valuers may question whether the Fair Value o debt or the ace value o debt should be subtracted rom Adjusted Enterprise Value when estimating the Fair Value o an equity instrument. A Market Participant perspective should be used incorporating individual acts and circumstances. Te premiseo Fair Value measurement is that the Investment is sold at the Measurement Date. Because the denition o Fair Value contains an exit price notion, itassumes that a change in control takes place upon the sale o the Investment at the Measurement Date. However, i debt must be repaid upon a change o control, then a question arises about how a Market Participant would be expected to value debt or purposes o valuing an equity instrument:(a) aking into account the timing and likelihood o a uture actual change in control (that is, assuming that a change in control has not yet taken placeas o the Measurement Date, but incorporating into the Fair Value o the debt the existence o the change in control provision); or(b) using a term o zero on the basis that a hypothetical change in control has taken place (that is, assuming that the change in control takes place onthe Measurement Date, resulting in the Fair Value o debt being equal to the ace or par value o debt) When using a Market Participant perspective, the Fair Value o debt may equal the ace or par value o debt depending on the acts and circumstances.I debt is not required to be repaid upon a change o control, then the Fair Value o equity would be impacted by avorable or unavorable terms (suchas interest rate) o the debt, or in other words, the Fair Value o debt reecting the avorable/unavorable elements would be subtracted rom AdjustedEnterprise value.

5 A orced transaction (e.g. a orced liquidation or distress sale) would not be considered Orderly.

6 ransaction costs are not considered a characteristic o an asset and thereore should not be added or included as a component o an asset’s Fair Value..



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3.4. MultiplesIn using the Earnings Multiple valuation

technique to estimate the Fair Value o an

Enterprise, the Valuer should:(i) Apply a multiple that is an appropriate

and reasonable indicator o value (given

the size, risk prole and earnings growthprospects o the underlying company)

to the maintainable earnings o the

company;(ii) Adjust the Enterprise Value or surplus or

non-operating assets or excess liabilities andother contingencies and relevant actors to

derive an Adjusted Enterprise Value or theInvestee Company;

(iii) Deduct rom this amount any nancial

instruments ranking ahead o the highest

ranking instrument o the Fund in a liquidation scenario (e.g. the amount that

would be paid) and taking into account

the eect o any instrument that may dilute the Fund’s Investment to derive the

Attributable Enterprise Value;

(iv) Apportion the Attributable EnterpriseValue appropriately between the relevant

nancial instruments using the perspective

o potential Market Participants. Judgementis required in assessing a Market Participant

perspective.

3.5. Net AssetsIn using the Net Assets valuation technique to

estimate the Fair Value o an Investment, theValuer should:(i) Derive an Enterprise Value or the

company using the perspective o a Market

Participant to value its assets and liabilities(adjusting, i appropriate, or non-operating

assets, excess liabilities and contingent assets

and liabilities);(ii) Deduct rom this amount any nancial


ranking instrument o the Fund in a liquidation scenario (e.g. the amount that

would be paid) and taking into accountthe eect o any instrument that may

dilute the Fund’s Investment to derive the

Attributable Enterprise Value; and

(iii) Apportion the Attributable Enterprise

Value appropriately between the relevantnancial instruments using the perspective

o potential Market Participants. Judgementis required in assessing a Market Participant

perspective.

3.6. Discounted Cash Flows or

Earnings (o Underlying

Business)

In using the Discounted Cash Flows or Earnings(o Underlying Business) valuation technique

to estimate the Fair Value o an Investment, theValuer should:

(i) Derive the Enterprise Value o the

company, using reasonable assumptionsand estimations o expected uture cash

ows (or expected uture earnings) andthe terminal value, and discounting to the

present by applying the appropriate risk-

adjusted rate that captures the risk inherentin the projections;

(ii) Adjust the Enterprise Value or surplus or

non-operating assets or excess liabilities andother contingencies and relevant actors to

derive an Adjusted Enterprise Value or the

Investee Company;(iii) Deduct rom this amount any nancial


ranking instrument o the Fund in a

liquidation scenario (e.g. the amount that would be paid) and taking into account

the eect o any instrument that may dilute the Fund’s Investment to derive the

Attributable Enterprise Value;(iv) Apportion the Attributable Enterprise Value

appropriately between the relevant nancial

instruments using the perspective o MarketParticipants. Judgement is required in

assessing a Market Participant perspective.



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3.7. Discounted Cash Flows

(rom the Investment)

In using the Discounted Cash Flows (rom anInvestment) valuation technique to estimate the

Fair Value o an Investment, the Valuer should

derive the present value o the cash ows romthe Investment using reasonable assumptions

and estimations o expected uture cash ows,

the terminal value or maturity amount, date,and the appropriate risk-adjusted rate that

captures the risk inherent to the Investment. Tis

valuation technique would generally be applied to

Investments with characteristics similar to debt.

3.8. Industry Valuation BenchmarksTe use o industry benchmarks is only likely tobe reliable and thereore appropriate as the main

basis o estimating Fair Value in limited situations,

and is more likely to be useul as a sanity check o values produced using other techniques.

3.9. Available Market Prices(i) Instruments quoted on an Active Market

should be valued at the price within the bid/ ask spread that is most representative o

Fair Value on the Measurement Date. Te

Valuer should consistently use the mostrepresentative point estimate in the bid /ask

spread.

(ii) Blockage Factors that reect size as a characteristic o the reporting entity’s

holding (specically, a actor that adjusts

the quoted price o an asset because themarket’s normal daily trading volume is not

sufcient to absorb the quantity held by theentity) should not be applied.

(iii) Discounts may be applied to prices

quoted in an Active Market i there issome contractual, Governmental or other

legally enorceable restriction attributable

to the security, not the holder, resulting in

diminished Liquidity o the instrumentthat would impact the price a Market

Participant would pay at the MeasurementDate.

4. Valuing Fund

Interests4.1. GeneralIn measuring the Fair Value o an interest in a

Fund the Valuer may base their estimate on their

attributable proportion o the reported Fund Net Asset Value (NAV) i NAV is derived rom the

Fair Value o underlying Investments and is as o the same Measurement Date as that used by the

Valuer o the Fund interest, except as ollows:

(i) i the Fund interest is actively traded FairValue would be the actively traded price;

(ii) i management has made the decision to

sell a Fund interest or portion thereo andthe interest will be sold or an amount

other than NAV, Fair Value would be the

expected sales price.

4.2. Adjustments to Net Asset ValueI the Valuer has determined that the reported NAV

is an appropriate starting point or determining FairValue, it may be necessary to make adjustmentsbased on the best available inormation at the

Measurement Date. Although the Valuer may look

to the Fund Manager or the mechanics o their FairValue estimation procedures, the Valuer needs to

have appropriate processes and related controls inplace to enable the Valuer to assess and understand

the valuations received rom the Fund Manager.

I NAV is not derived rom the Fair Value o

underlying Investments and / or is not as o the sameMeasurement Date as that used by the Valuer o the

Fund interest, then the Valuer will need to assess whether such dierences are signicant, resulting in

the need to adjust reported NAV.

4.3. Secondary Transactions When a Valuer o an interest knows the relevantterms o a Secondary transaction in that

particular Fund and the transaction is orderly,

the Valuer must consider the transaction priceas one component o the inormation used to

measure the Fair Value o a Fund interest.




Section II: Explanatory Comments-

Measuring Fair Value



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1.1. Fair Value is the price that would be received to sell an asset in an Orderly ransaction between Market Participantsat the Measurement Date.

1.2. A Fair Value measurement assumesthat a hypothetical transaction to sell anasset takes place in the Principal Market

or in its absence, the Most AdvantageousMarket or the asset.

1.3. For actively traded (quoted)Investments, available market prices will bethe exclusive basis or the measurement o Fair Value or identical instruments.

1.4. For Unquoted Investments, themeasurement o Fair Value requiresthe Valuer to assume the Underlying

Business or instrument is realised or sold at the Measurement Date, appropriately allocated to the various interests, regardlesso whether the Underlying Business isprepared or sale or whether its shareholdersintend to sell in the near uture.

1.5. Some Funds invest in multiplesecurities or tranches o the same portoliocompany. I a Market Participant would be expected to transact all positions inthe same underlying Investee Company simultaneously, or example separateinvestments made in series A, series B,and series C, then, Fair Value would beestimated or the aggregate Investmentsin the Investee Company. I a Market Participant would be expected to transact separately, or example purchasing series

A, independent rom series B and seriesC, or i debt Investments are purchased

independent o equity, then Fair Value would be more appropriately determined or each individual nancial instrument.

Te objective is to estimate the price at which an

Orderly ransaction would take place between

Market Participants at the Measurement Date.

Fair Value is the hypothetical exchange pricetaking into account current market conditions

or buying and selling assets. Fair Value is not

the amount that an entity would receive or pay in a orced transaction, involuntary liquidation

or distressed sale.

Although transers o shares in private businesses

are oten subject to restrictions, rights o pre-

emption and other barriers, it should still bepossible to estimate what amount a willing buyer

would pay to take ownership o the Investment,

subject to such restrictions.

Te estimation o Fair Value assumes that the

time period required to consummate a transactionhypothetically began at a point in time in

advance o the Measurement Date such thatthe hypothetical exchange culminates on the

Measurement Date. Tereore, Fair Value shouldreect the actual amount that a seller wouldreceive in an Orderly ransaction under current

market conditions at the Measurement Date.

An additional discount or Marketability (whereMarketability is dened as the time required to

eect a transaction) is not appropriate. Liquidity or

illiquidity (meaning the requency o transactions)is taken into account by Market Participants and

should be a actor used in assessing Fair Value.

2. Principles o Valuation

2.1. Te Fair Value o each Investment should

be assessed at each Measurement Date.

In the absence o an Active Market or a nancial instrument, the Valuer must estimate

Fair Value utilising one or more o the valuation

techniques.

1. The Concept o

Fair Value



20



2.2. In estimating Fair Value or an

Investment, the Valuer should apply

a technique or techniques that is/areappropriate in light o the nature, acts

and circumstances o the Investment in the

context o the total Investment portolio

and should use reasonable current market

data and inputs combined with Market

Participant assumptions.

2.3. Fair Value is estimated using the

perspective o Market Participants and

market conditions at the Measurement Date irrespective o which valuation

techniques are used.

In private equity, value is generally realised through

a sale or otation o the entire Underlying Business,

rather than through a transer o individualshareholder stakes. Te value o the business as a

whole at the Measurement Date (Enterprise Value)

will oten provide a key insight into the value o

Investment stakes in that business.7

I value is realised as described above, thenEnterprise Value would be used by a Market

Participant to determine the orderly price they would pay or an Investment. Alternatively, i a

Market Participant would transact or individual

instruments, such as individual shares debttranches, or a single series o equity, then Fair

Value would be more appropriately assessed at

the individual instrument level.

2.4. Generally, or Private Equity, Market

Participants determine the price they will

pay or individual equity instrumentsusing Enterprise Value estimated rom a

hypothetical sale o the Investee Company,

as ollows:

(i) Determine the Enterprise Value o

the Investee Company using the

valuation techniques;

(ii) Adjust the Enterprise Value or

actors that a Market Participant

would take into account such as

surplus assets or excess liabilitiesand other contingencies and relevant

actors, to derive an Adjusted

Enterprise Value or the Investee

Company;

(iii) Deduct rom this amount any

nancial instruments ranking ahead

o the highest ranking instrument o

the Fund in a sale o the Enterprise

scenario (e.g. the amount that would

be paid 8

) and taking into account the eect o any instrument that

may dilute the Fund’s Investment to

derive the Attributable Enterprise

Value;

(iv) Apportion the Attributable

Enterprise Value between the

company’s relevant nancial

instruments according to their

ranking;

7 Some have interpreted International accounting standards as requiring the Unit o Account to be a single share o a private company (see discussion o Accounting Standards and Unit o Account on pages 6 through 9 o these Valuation Guidelines). Tese Valuation Guidelines do not address a single shareUnit o Account conclusion (other than or actively traded securities) as a Fair Value measurement or a single share o a private company generally does notoccur in practice and would thereore not provide a meaningul measurement o Fair Value.

8 Some Valuers may question whether the Fair Value o debt or the ace value o debt should be subtracted rom Adjusted Enterprise Value when estimating the Fair Value o an equity instrument. A Market Participant perspective should be used incorporating individual acts and circumstances. Te premiseo Fair Value measurement is that the Investment is sold at the Measurement Date. Because the denition o Fair Value contains an exit price notion, itassumes that a change in control takes place upon the sale o the Investment at the Measurement Date. However, i debt must be repaid upon a change o control, then a question arises about how a Market Participant would be expected to value debt or purposes o valuing an equity instrument:(a) aking into account the timing and likelihood o a uture actual change in control (that is, assuming that a change in control has not yet taken placeas o the Measurement Date, but incorporating into the Fair Value o the debt the existence o the change in control provision); or

(b) using a term o zero on the basis that a hypothetical change in control has taken place (that is, assuming that the change in control takes place onthe Measurement Date, resulting in the Fair Value o debt being equal to the ace or par value o debt) When using a Market Participant perspective, the Fair Value o debt may equal the ace or par value o debt depending on the acts and circumstances.I debt is not required to be repaid upon a change o control, then the Fair Value o equity would be impacted by avorable or unavorable terms (suchas interest rate) o the debt, or in other words, the Fair Value o debt reecting the avorable/unavorable elements would be subtracted rom AdjustedEnterprise value.



21



(v) Allocate the amounts derived

according to the Fund’s holding

in each nancial instrument,

representing their Fair Value.

It is important to recognise the subjective natureo private equity Investment valuation. It is

inherently based on orward-looking estimates

and judgements about the Underlying Businessitsel: its market and the environment in

which it operates; the state o the mergers andacquisitions market; stock market conditions

and other actors and expectations that exist at

the Measurement Date.

Due to the complex interaction o these actors

and oten the lack o directly comparable markettransactions, care should be applied when using

publicly available inormation regarding other

entities in deriving a valuation. In order tomeasure the Fair Value o an Investment, the

Valuer will have to exercise judgement and make

necessary estimates to adjust the market data toreect the potential impact o other actors such

as geography, credit risk, oreign currency, rightsattributable, equity prices and volatility.

As such, it must be recognised that, whilevaluations do provide useul interim indications

o the progress o a particular Underlying

Business or Investment, ultimately it is notuntil Realisation that true perormance is rmly

determined. A Valuer should be aware o reasons why realisation proceeds are dierent rom theirestimates o Fair Value and consider such reasons

in uture Fair Value estimates.

Apportion the Attributable Enterprise Value

appropriately

Te apportionment should reect the respectiveamounts accruing to the holder o each nancial

instrument and all other nancial instruments

(regardless o holder) in the event o a realisationat the Measurement Date. As discussed urther in

section III 5.8, where there are ratchets or shareoptions or other mechanisms (such as ‘liquidation

preerences’, in the case o Investments in early-

stage businesses) in place which are likely to be

triggered in the event o a sale o the company

at the given Enterprise Value at that date, theseshould be reected in the apportionment.

Te estimation o Fair Value should be

undertaken on the assumption that options and

warrants are exercised, where the Fair Value isin excess o the exercise price and accordingly

it is a reasonable assumption that these will

be exercised. Te aggregate exercise price o these may result in surplus cash arising in the

Underlying Business i the aggregate exerciseprice is signicant.

Where signicant positions in options and warrantsare held by the Fund, these may need to be valued

separately rom the underlying Investments using

an appropriate option based pricing model.

Dierential allocation o proceeds may have

an impact on the value o an Investment. I

liquidation preerences exist, these need to bereviewed to assess whether they are expected to

give rise to a benet to the Fund, or a benet toa third party to the detriment o the Fund.

When subtracting outstanding debt romEnterprise Value to measure the Fair Value

o Equity Instruments, judgement should beexercised to ensure that the Fair Value o debt

represents a Market Participant perspective. For

example, i debt must be repaid upon the sale o the Underlying Business, which is oten the case

in a private equity transaction, then a Market

Participant transacting in their economic bestinterest, may deem the Fair Value o debt to

equal the Par Value o debt (or the amount to

be repaid) or purposes o determining the FairValue o equity. I debt would not be repaid when

the Enterprise is sold, then the Fair Value o debt

would not necessarily equal the Par Value o debt.

It should be noted, however, that i debt is a standalone Investment, a Market Participant would



22



9 A orced transaction (e.g. a orced liquidation or distress sale) would not be considered Orderly.

take into account risk, coupon, time to expected

repayment, and other market conditions in

determining the Fair Value o the debt instrument,

which may not be equivalent to Par Value.

2.5. Because o the uncertainties inherent

in estimating Fair Value or private equity

Investments, care should be applied in

exercising judgement and making the

necessary estimates. However, the Valuer

should be wary o applying excessive caution.

Private Equity Funds oten undertake an

Investment with a view to build, develop and/orto eect substantial changes in the Underlying Business, whether it is to its strategy, operations,

management, or nancial condition. Sometimes

these situations involve rescue renancing or a turnaround o the business in question. While it

might be difcult in these situations to measure

Fair Value, it should in most cases be possible toestimate the amount a Market Participant would

pay or the Investment in question at a point

in time.

Tere may be situations where:

• the range o reasonable Fair Value estimates is

signicant;

• the probabilities o the various estimates withinthe range cannot be reasonably assessed;

• the probability and nancial impact o

achieving a key milestone cannot be reasonably predicted; and

• there has been no recent investment into thebusiness.

While these situations prove difcult, the Valuer

must still come to a conclusion as to their best

estimate o the hypothetical exchange pricebetween willing Market Participants.

Estimating the increase or decrease in Fair Valuein such cases may involve reerence to broad

indicators o value change (such as relevant stock

market indices). Ater considering these broad

indicators, in some situations, the Valuer might

reasonably conclude that the Fair Value at the

previous Measurement Date remains the best

estimate o Fair Value.

Where a change in Fair Value is perceived to

have occurred, the Valuer should amend thecarrying value o the Investment to reect the

new Fair Value estimate.

2.6. When the price o the initial

investment in an Investee Company or

instrument is deemed Fair Value (which is

generally the case i the entry transaction

is considered Orderly 9

), then the valuationtechniques that are expected to be used

to estimate Fair Value in the uture

should be evaluated using market inputs

as o the date the investment was made.

Tis process is known as Calibration.

Calibration validates that the valuation

techniques using contemporaneous

market inputs will generate Fair Value at

inception and thereore that the valuation

techniques using market inputs as o each subsequent Measurement Date will

generate Fair Value at each such date.

Fair Value should reect reasonable estimates and

assumptions or all signicant actors that partiesto an arm’s length transaction would be expected to

consider, including those which impact upon theexpected cash ows rom the Investment and upon

the degree o risk associated with those cash ows.

In assessing the reasonableness o assumptions

and estimates, the Valuer should:

• note that the objective is to replicate thosethat the parties in an arm’s-length transaction

would make at the Measurement Date;

• take account o events taking place subsequent

to the Measurement Date where they provide

additional evidence o conditions that existedat the Measurement Date that were known or

knowable by Market Participants;• take account o current market conditions at



23



the Measurement Date; and

• to the extent the initial entry price is deemed

Fair Value, test (or calibrate) valuation

techniques expected to be used at subsequentvaluation dates, using input data at inception

to ensure that the techniques provide a resultant initial Fair Value estimate equal to the

entry price; (Note: at subsequent Measurement

Dates the calibrated valuation techniques areused with current market inputs reecting then

current market conditions.);

3. Valuation Methods3.1. General

A number o valuation methods or techniques

that may be considered or use in measuring the Fair Value o Unquoted Instruments are

described in sections 3.3. to 3.8. below. Tese

valuation techniques should incorporate case-specic actors aecting Fair Value. For example,

i the Underlying Business is holding surplus

cash or other assets, the value o the businessshould reect that act to the extent a Market

Participant would attribute value to such items.

echniques or valuing Actively raded

Instruments are described in section 3.9.

Because, in the private equity arena, value is

generally realised through a sale or otation o theentire Underlying Business, rather than through a

transer o individual shareholder stakes, the valueo the business as a whole at the MeasurementDate will oten provide a key insight into the

value o Investment stakes in that business. For

this reason, a number o the techniques describedbelow involve estimating the Enterprise Value

as an initial step. I a Market Participant would

be expected to maximize value through the saleo the entire business, the estimation o the

Fair Value o individual nancial instruments

would include an assessment o the allocation o the Enterprise Value to the value o individual

nancial instruments.

Tere will be some situations where the Fair Value

will derive mainly rom the expected cash ows

and risk o the relevant nancial instruments

rather than rom the Enterprise Value. Tevaluation technique used in these circumstances

should thereore reect this act.

3.1 (i) In determining the Fair Value o

an Investment, the Valuer should use

judgement. Tis includes consideration

o those specic terms o the Investment

which may impact its Fair Value. In this

regard, the Valuer should consider the

economic substance o the Investment, which may take precedence over the strict

legal orm.

Underlying Businesses may operate using multiple currencies. Investments may be

denominated in currencies other than theFunds reporting currency. Movements in rates

o exchange may impact the value o the Fund’s

Investments and these should be taken intoaccount using a Market Participant perspective.

3.1 (ii) Where the reporting currency o

the Fund is dierent rom the currency

in which the Investment is denominated,

translation into the reporting currency or

reporting purposes should be done using

the bid spot exchange rate prevailing at the

Measurement Date.

3.2. Selecting the Appropriate

Valuation Technique

Te Valuer should exercise their judgement

to select the valuation technique or

techniques most appropriate or a

particular Investment.

Te key criterion in selecting a valuation

technique is that it should be appropriate inlight o the nature, acts and circumstances o

the Investment and in the expected view o



24



Market Participants. Te Valuer may consider

utilising urther techniques to check the Fair

Value derived, as appropriate.

When selecting the appropriate valuation

technique each Investment should be consideredindividually.

An appropriate valuation technique willincorporate available inormation about all

actors that are likely to materially aect the Fair

Value o the Investment.

Te Valuer will select the valuation techniquethat is the most appropriate and consequently

make valuation adjustments on the basis o their

inormed and experienced judgement. Tis willinclude consideration o actors such as:

• the relative applicability o the techniques

used given the nature o the industry andcurrent market conditions;

• the quality, and reliability o the data used in

each valuation technique;

• the comparability o Enterprise or transactiondata;

• the stage o development o the Enterprise;

• the ability o the Enterprise to generate

maintainable prots or positive cashow;

• any additional considerations unique to the

Enterprise; and

• the results o testing (calibrating) techniquesand inputs to replicate the entry price

o the Investment (Note: at subsequent

Measurement Dates the calibrated valuationtechniques are used with updated inputs

reecting then current market conditions.).

In assessing whether a technique is appropriate,

the Valuer should maximise the use o

techniques that draw heavily on observablemarket-based measures o risk and return. Fair

Value estimates based entirely on observablemarket data are deemed less subjective than

those based on Valuer assumptions. In some

cases observable market data may requireadjustment by the Valuer to properly reect

the acts and circumstances o the Instrument

being valued. Tis adjustment should not be

automatically regarded as reducing the reliability

o the Fair Value estimation.

While accounting standards do not speciy a hierarchy o valuation techniques, or the

private equity industry utilising discounted

cashows and industry benchmarks in isolation, without using market-based measures would

be considered rare and then only with caution.

Tese techniques may be useul as a cross-check o values estimated using the market-based

valuation techniques.

Where the Valuer considers that several

techniques are appropriate to value a specicInvestment, the Valuer may consider the outcome

o these dierent valuation techniques so that

the results o one particular valuation techniquemay be used as a cross-check o values or to

corroborate or otherwise be used in conjunction

with one or more other techniques in order to

measure the Fair Value o the Investment.

echniques should be applied consistently romperiod to period, except where a change would

result in better estimates o Fair Value.

Te basis or any changes in valuation

techniques should be clearly understood. Itis expected that there would not be requent

changes in valuation techniques over the course

o the lie o an Investment.

Te table on page 25 identies a number o the

most widely used techniques.

3.3. Price o Recent Investment Where the Investment being valued was itsel

made recently, its cost may provide a good

indication o Fair Value. Where there has been

any recent Investment in the Investee Company,the price o that Investment will provide a basis

o the valuation.



25



10 ransaction costs are not considered a characteristic o an asset and thereore should not be added or included as a component o an asset’s Fair Value.

Valuation Technique Approach

Price o Recent Investment (Market Approach)

Multiples (Market Approach)

Net assets (Cost Approach)

Discounted cash fows or earnings(o Underlying Business)

(Income Approach)

Discounted cash fows(rom an Investment)

(Income Approach)

Industry valuation benchmarks (Market Approach)

Te validity o a valuation obtained in this way

is inevitably eroded over time, since the price at

which an Investment was made reects the eectso conditions that existed on the date that the

transaction took place. In a dynamic environment,

changes in market conditions, the passage o timeitsel and other actors will act to diminish the

appropriateness o this valuation technique as a means o estimating value at subsequent dates.

In addition, where the price at which a third party has invested is being considered as the basis o

valuation, the background to the transaction must

be taken in to account. In particular, the ollowing actors may indicate that the price was not wholly

representative o the Fair Value at the time:

• dierent rights attach to the new and existing Investments;

• disproportionate dilution o existing investors

arising rom a new investor(s);• a new investor motivated by strategic

considerations; or

• the transaction may be considered to be a orced sale or ‘rescue package’.

Tis valuation technique is likely to be

appropriate or all private equity Investments,

but only or a limited period ater the date o therelevant transaction. Because o the relatively high

requency with which unding rounds are otenundertaken or seed and start-up situations, or in

respect o businesses engaged in technological or

scientic innovation and discovery, this method

will oten be appropriate or valuing Investments

in such circumstances. Generally, Fair Value would be indicated by the post money valuation.

Te length o period or which it would remain

appropriate to use this valuation technique will

depend on the specic circumstances o theInvestment and is subject to the judgement o

the Valuer.

In stable market conditions with little change

in the entity or external market environment,the length o period or which this valuation

technique is likely to be appropriate will be

longer than during a period o rapid change.

3.3. In applying the Price o Recent

Investment valuation technique, the Valuer

uses the initial cost o the Investment itsel,

excluding transaction costs10, or, where

there has been subsequent investment, the

price at which a signicant amount o new Investment into the company was made,

to estimate the Enterprise Value, but only

i deemed to represent Fair Value and only

or a limited period ollowing the date o

the relevant transaction. During the limited

period ollowing the date o the relevant

transaction, the Valuer should in any case

assess at each Measurement Date whether

changes or events subsequent to the

relevant transaction would imply a changein the Investment’s Fair Value.

Te Price o Recent Investment valuation

technique is commonly used in a seed, start-

up or an early-stage situation, where there areno current and no short-term uture earnings

or positive cash ows. For these Enterprises,

typically, it is difcult to gauge the probability and nancial impact o the success or ailure o

development or research activities and to make

reliable cash ow orecasts.



26



Consequently, the most appropriate approach to

measure Fair Value is a valuation technique that

is based on market data, that being the Price o a

Recent Investment.

I the Valuer concludes that the Price o Recent

Investment, unadjusted, is no longer relevant, and

there are no comparable companies or transactionsrom which to iner value, it may be appropriate to

apply an enhanced assessment based on an industry

analysis, sector analysis and/or milestone analysis.

In such circumstances, industry-specic

benchmarks/milestones, which are customarily and routinely used in the specic industries o the

Investee Company, can be used in estimating FairValue where appropriate. In applying the milestone

approach, the Valuer attempts to ascertain whether

there has been a change in the milestone and/orbenchmark which would indicate that the Fair

Value o the Investment has changed.

For an Investment in early or development

stages, commonly a set o agreed milestones would be established at the time o making the

investment decision. Tese will vary across types

o investment, specic companies and industries,but are likely to include:

Financial measures: − revenue growth; − protability expectations; − cash burn rate;

− covenant compliance.

echnical measures: − phases o development; − testing cycles; − patent approvals; − regulatory approvals.

Marketing and sales measures: − customer surveys; − testing phases; − market introduction; − market share.

In addition, the key market drivers o the Investee

Company, as well as the overall economicenvironment, are relevant to the assessment.

In applying the milestone analysis approach,the Valuer attempts to assess whether there is an

indication o change in Fair Value based on a consideration o the milestones. Tis assessment

might include considering whether:

• there has been any signicant change in theresults o the Investee Company compared to

budget plan or milestone;

• there have been any changes in expectation

that technical milestones will be achieved;• there has been any signicant change in

the market or the Investee Company or itsproducts or potential products;

• there has been any signicant change in the

global economy or the economic environmentin which the Investee Company operates;

• there has been any signicant change in

the observable perormance o comparablecompanies, or in the valuations implied by the

overall market;• any internal matters such as raud, commercial

disputes, litigation, changes in management

or strategy.

I the Valuer concludes that there is an

indication that the Fair Value has changed, they must estimate the amount o any adjustment

rom the last Price o Recent Investment. By its

very nature such adjustment will be subjective.

Tis estimation is likely to be based on objectivedata rom the company, and the experience o

the investment proessionals and other investors.However, the necessity and magnitude o the

adjustments are relatively subjective and requirea large amount o judgment on the part o the

Valuer. Where deterioration in value has occurred,

the Valuer should reduce the carrying value o theInvestment reported at the previous Measurement

Date to reect the estimated decrease.

I there is evidence o value creation, such as

those listed above, the Valuer may consider



27



increasing the carrying value o the Investment.

Caution must be applied so that positive

developments are only valued when they

contribute to an increase in value o theUnderlying Business when viewed by a Market

Participant. When considering these moresubtle indicators o value enhancement, in the

absence o additional nancing rounds or prot

generation, the Valuer should consider whatvalue a Market Participant would place on these

indicators, taking into account the potential

outcome and the costs and risks to achieving that outcome.

In the absence o signicant revenues, prots or

positive cash ows, other methods such as the

earnings multiple are generally inappropriate.Te DCF technique may be utilised as a cross-

check, however the disadvantages inherent

in these, arising rom the high levels o subjective judgement, may render the method

inappropriate without corroborating support.

3.4. MultiplesTis valuation technique involves the applicationo an earnings multiple to the earnings o thebusiness being valued in order to derive a valueor the business.

Tis valuation technique is likely to beappropriate or an Investment in an establishedbusiness with an identiable stream o continuing earnings that are considered to be maintainable.

Tis section sets out guidance or preparing valuations o businesses on the basis o positiveearnings. However, or businesses that are stillin the development stage and prior to positiveearnings being generated, multiples o actualor projected revenue may be used as a basis o valuation. A revenue multiple is commonly based on an assumption as to the ‘normalised’level o earnings that can be generated rom

that revenue. Te valuation technique andconsiderations set out here or earnings multiplesequally apply i a multiple o revenue is utilised.

Tis valuation technique may be applicable to

companies with negative earnings, i the losses

are considered to be temporary and one can

identiy a level o ‘normalised’ maintainableearnings. Tis may involve the use o adjusted

historic earnings, using a orecast level o earnings or applying a ‘sustainable’ prot margin

to current or orecast revenues.

Te most appropriate earnings to use in this

valuation technique would be those likely tobe used by a prospective Market Participant

purchaser o the business.

3.4. In using the Earnings Multiple

valuation technique to estimate the Fair

Value o an Enterprise, the Valuer should:

(i) Apply a multiple that is an appropriate

and reasonable indicator o value

(given the size, risk prole and earnings

growth prospects o the underlying

company) to the maintainable earnings

o the company;

(ii) Adjust the Enterprise Value or surplusor non-operating assets or excess

liabilities and other contingencies and

relevant actors to derive an Adjusted

Enterprise Value or the Investee

Company;




the Fund in a liquidation scenario

(e.g. the amount that would be paid)and taking into account the eect

o any instrument that may dilute

the Fund’s Investment to derive the

Attributable Enterprise Value;


Enterprise Value appropriately

between the relevant nancial

instruments using the perspective

o potential Market Participants.

Judgement is required in assessing a Market Participant perspective.



28



Guidance on the interpretation o underlined

terms is given below.

Appropriate multipleBy denition, earnings multiples have as their

numerator a value, such as price, EnterpriseValue, etc., and as their denominator an

earnings gure. Te denominator can be the

earnings gure or any specied period o timeand multiples are oten dened as ‘historical’,

‘current’ or ‘orecast’ to indicate the earnings

used. It is important that the multiple usedcorrelates to the period and concept o earnings

o the company being valued.

A number o earnings multiples are used,

including price/earnings (P/E), Enterprise Value/earnings beore interest and tax (EV/EBI) and

depreciation and amortisation (EV/EBIDA).

Te particular multiple used should beappropriate or the business being valued. (Te

multiples o revenues and their use are presented

in 3.8. Industry Valuation Benchmarks).

In general, because o the role o nancial

structuring in private equity, multiples shouldbe used to derive an Enterprise Value or the

Underlying Business. Where EBIDA multiplesare available, these are commonly used. When

unavailable, P/E multiples may be used since

these are more commonly reported. For a P/Emultiple to be comparable, the two entities

should have similar nancing structures and

levels o borrowing.

Tereore, where a P/E multiple is used, it

should generally be applied to an EBI gure which has been adjusted or the impact o

nance costs relating to operations, working

capital needs and tax impacts. Tese adjustmentsare designed to eliminate the eect on the

earnings o the acquisition nance on theEnterprise Value since this is subsequently

adjusted.

Reasonable multiple

Te Valuer would usually derive a multiple by

reerence to current market-based multiples,

reected in the market valuations o quotedcompanies or the price at which companies

have changed ownership. Te multiple derivedrom the acquisition price is calibrated with the

multiple o comparable companies expected

to be used in on-going valuation estimates.Dierences between the acquisition multiple

and the comparable companies multiples are

monitored and adjusted, as appropriate, overtime, given dierences between the Investee

company and the comparable companies.

For example, assume the acquisition price o

an Investment was deemed Fair Value (e.g. anOrderly ransaction price) and represented

an EBIDA multiple o 8 when comparable

company EBIDA multiples were 10. In utureperiods, when estimating Fair Value judgement

is required as to whether or not the 20%

discount to comparable company multiples

should be maintained or should change at eachsubsequent Measurement Date.

Tis market-based approach presumes that the

comparable companies are correctly valued by the market. While there is an argument that

the market capitalisation o a quoted company

reects not the value o the company but merely the price at which ‘small parcels’ o shares are

exchanged, the presumption in these Valuation

Guidelines is that market based multiples areindicative o the value o the company as a

whole.

Where market-based multiples are used, the aim

is to identiy companies that are similar, in terms

o risk attributes and earnings growth prospects,to the company being valued. Tis is more likely

to be the case where the companies are similar interms o business activities, markets served, size,

geography and applicable tax rate.



29



In using P/E multiples, the Valuer should note

that the P/E ratios o comparable companies will

be aected by the level o nancial gearing and

applicable tax rate o those companies.

In using EV/EBIDA multiples, the Valuershould note that such multiples, by denition,

remove the impact on value o depreciation

o xed assets and amortisation o goodwilland other intangibles. I such multiples are

used without sufcient care, the Valuer may

ail to recognise that business decisions tospend heavily on xed assets or to grow by

acquisition rather than organically do have realcosts associated with them which should be

reected in the value attributed to the business

in question.

It is important that the earnings multiple o each

comparable company is adjusted or points o dierence between the comparable company

and the company being valued. Tese points

o dierence should be considered and assessed

by reerence to the two key variables o risk and earnings growth prospects which underpin

the earnings multiple. In assessing the risk prole o the company being valued, the Valuer

should recognise that risk arises rom a range o aspects, including the nature o the company’s

operations, the markets in which it operates

and its competitive position in those markets,the quality o its management and employees

and, importantly in the case o private equity,

its capital structure and the ability o the Fundholding the Investment to eect change in the

company.

When considering adjustments to reported

multiples, the Valuer should also consider the

impact o the dierences between the Liquidity o the shares being valued and those on a quoted

exchange. Tere is a risk associated with a lack o Liquidity. Te Valuer should consider the extent

to which a prospective acquirer o those shares

would take into account the additional risksassociated with holding an unquoted share.

In an unquoted company the risk arising

rom the lack o Liquidity is clearly greater

or a shareholder who is unable to control

or inuence a realisation process than or a shareholder who owns sufcient shares to drive a

realisation at will. It may reasonably be expectedthat a prospective Market Participant purchaser

would assess that there is a higher risk associated

with holding a minority position than or a control position.

Value attributed to a lack o Liquidity may be difcult to assess. Calibration provides a

technique to objectively assess value attributedto a lack o Liquidity. Te multiple at the date

o acquisition should be calibrated against the

market comparable multiples. Dierences, i any,should be understood and similar dierences

may be expected or need to be understood at

subsequent valuation dates.

For example, the reasons why the comparable

company multiples may need to be adjusted may

include the ollowing: − the size and diversity o the entities and,

thereore, the ability to withstand adverseeconomic conditions;

− the rate o growth o the earnings;− the reliance on a small number o key

employees;

− the diversity o the product ranges; − the diversity and quality o the customer base;

− the level o borrowing;

− or any other reason the quality o earningsmay dier; and

− the risks arising rom the lack o Liquidity o

the shares.

Fair Value measurements should not include

a premium or discount that is inconsistent with the instrument (Unit o Account) being

valued. Blockage Factors are not allowed by accounting standards. However, investors in

private companies generally consider their

overall interest and the extent to which they actin concert with other investors. Judgment must



30



be applied to individual acts and circumstances

to assess the amount a Market Participant would

pay in the context o the potential adjustments

to multiples noted above.

Recent transactions involving the sale o similarcompanies are sometimes used as a rame o

reerence in seeking to derive a reasonable

multiple. It is sometimes argued, since suchtransactions involve the transer o whole

companies whereas quoted multiples relate to

the price or ‘small parcels’ o shares, that recenttransactions provide a more relevant source

o multiples. However, the appropriatenesso the use o recent transaction data is oten

undermined by the ollowing:

− the lack o orward looking nancial data andother inormation to allow points o dierence

to be identied and adjusted or;

− the generally lower reliability and transparency o reported earnings gures o private

companies;

− the impact o reputational issues, such as ESG

and other actors; and − the lack o reliable pricing inormation or the

transaction itsel.

It is a matter o judgement or the Valuer asto whether, in deriving a reasonable multiple,

they reer to a single comparable company or a

number o companies or the earnings multipleo a quoted stock market sector or sub-sector. It

may be acceptable, in particular circumstances,

or the Valuer to conclude that the use o quotedsector or sub-sector multiples or an average

o multiples rom a ‘basket’ o comparable

companies may be appropriate.Maintainable earnings

In applying a multiple to maintainable earnings,

it is important that the Valuer is satised thatthe earnings gure can be relied upon. While

this might tend to avour the use o auditedhistorical gures rather than unaudited or

orecast gures, it should be recognised that

value is by denition a orward-looking concept,

and quoted markets more oten think o value

in terms o ‘current’ and ‘orecast’ multiples,

rather than ‘historical’ ones. In addition, thereis the argument that the valuation should, in a

dynamic environment, reect the most recentavailable inormation. Tere is thereore a trade-

o between the reliability and relevance o the

earnings gures available to the Valuer.

On balance, while it remains a matter o

judgement or the Valuer, a Market Participantperspective should be used either ocused on

historical earnings or ocused on uture earningsbased on the availability and reliability o

orward looking projections and multiples or

historical results and multiples.

Whichever period’s earnings are used, the

Valuer should satisy himsel that they represent a reasonable estimate o maintainable

earnings, which implies the need to adjust or

exceptional or non-recurring items, the impact

o discontinued activities and acquisitions andorecast material changes in earnings.

3.5. Net AssetsTis valuation technique involves deriving thevalue o a business by reerence to the value o its

net assets.

Tis valuation technique is likely to be

appropriate or a business whose value derivesmainly rom the underlying Fair Value o its

assets rather than its earnings, such as property

holding companies and investment businesses(such as Fund-o-Funds as more ully discussed

in 4. Valuing Fund Interests).

Tis valuation technique may also be appropriate

or a business that is not making an adequate

return on assets and or which a greater value

can be realised by liquidating the business andselling its assets. In the context o private equity,



31



it may thereore be appropriate, in certain

circumstances, or valuing Investments in loss-

making companies and companies making only

marginal levels o prots.

3.5. In using the Net Assets valuation

technique to estimate the Fair Value o an

Investment, the Valuer should:

(i) Derive an Enterprise Value or the

company using the perspective o

a Market Participant to value its

assets and liabilities (adjusting,

i appropriate, or non-operating

assets, excess liabilities and contingent assets and liabilities);

(ii) Deduct rom this amount any



the Fund in a liquidation scenario

(e.g. the amount that would be paid)

and taking into account the eect

o any instrument that may dilute

the Fund’s Investment to derive the

Attributable Enterprise Value; and (iii) Apportion the Attributable




o potential Market Participants.

Judgement is required in assessing a

Market Participant perspective.

3.6. Discounted Cash Flows or Earnings (o Underlying

Business)Tis valuation technique involves deriving thevalue o a business by calculating the presentvalue o expected uture cash ows (or thepresent value o expected uture earnings, as a surrogate or expected uture cash ows). Tecash ows and ‘terminal value’ are those o the Underlying Business, not those rom the

Investment itsel.

Te Discounted Cash Flows (DCF) technique

is exible in the sense that it can be applied

to any stream o cash ows (or earnings). In

the context o private equity valuation, thisexibility enables the valuation technique to

be applied in situations that other techniquesmay be incapable o addressing. While this

valuation technique may be applied to businessesgoing through a period o great change, such

as a rescue renancing, turnaround, strategic

repositioning, loss making or is in its start-upphase, there is a signicant risk in utilising this

valuation technique.

Te disadvantages o the DCF valuation

technique centre around its requirement or

detailed cash ow orecasts and the need toestimate the ‘terminal value’ and an appropriate

risk-adjusted discount rate. All o these inputs

require substantial subjective judgements to bemade, and the derived present value amount is

oten sensitive to small changes in these inputs.

Tere is no hierarchy o valuation techniquesrequired by accounting standards. However,due to the high level o subjectivity in selecting

inputs or this technique when valuing equity

Investments or the private equity industry, DCFbased valuations are more useul as a cross-

check o values estimated under market-based

techniques and should generally not be used inisolation.

In assessing the appropriateness o this valuationtechnique, the Valuer should consider whether

its disadvantages and sensitivities are such, in

the particular circumstances, as to render theresulting Fair Value insufciently reliable.



32



3.6. In using the Discounted Cash Flows

or Earnings (o Underlying Business)

valuation technique to estimate the Fair

Value o an Investment, the Valuer should:

(i) Derive the Enterprise Value o

the company, using reasonable

assumptions and estimations o

expected uture cash ows (or expected

uture earnings) and the terminal

value, and discounting to the present

by applying the appropriate risk-

adjusted rate that captures the risk

inherent in the projections;

(ii) Adjust the Enterprise Value or

surplus or non-operating assets

or excess liabilities and other

contingencies and relevant actors to

derive an Adjusted Enterprise Value

or the Investee Company;




the Fund in a liquidation scenario (e.g.the amount that would be paid) and

taking into account the eect o any

instrument that may dilute the Fund’s

Investment to derive the Attributable

Enterprise Value;





o Market Participants. Judgement is required in assessing a Market

Participant perspective.

3.7. Discounted Cash Flows

(rom an Investment)Tis valuation technique applies the DCF

concept and technique to the expected cashows rom the Investment itsel.

Where Realisation o an Investment or a

otation o the Underlying Business is imminentand the pricing o the relevant transaction has

been substantially agreed, the Discounted Cash

Flows (rom the Investment) valuation technique

(or, as a surrogate, the use o a simple discount

to the expected Realisation proceeds or otation

value) is likely to be the most appropriatevaluation technique.

Tis valuation technique, because o its

exibility, is capable o being applied to all

private equity Investment situations. It isparticularly suitable or valuing non-equity

Investments in instruments such as debt

or mezzanine debt, since the value o suchinstruments derives mainly rom instrument-

specic cash ows and risks rather than rom thevalue o the Underlying Business as a whole.

However, because o its inherent reliance onsubstantial subjective judgements, and because

o the general availability o market based

techniques, the Valuer should be extremely cautious o using this valuation technique

as the only basis o estimating Fair Value or

Investments which include an equity element.

Te valuation technique will oten be useul as a

common sense check o values produced using other techniques.

Risk and the rates o return necessary tocompensate or dierent risk levels are central

commercial variables in the making o all privateequity Investments. Accordingly there exists

a rame o reerence against which to make

discount rate assumptions.

However the need to make detailed cash ow

orecasts over the Investment lie (except incircumstances where realisation is imminent)

may reduce the reliability and crucially or

equity Investments, there remains a need toestimate the ‘terminal value’.

Where the Investment comprises equity ora combination o equity and other nancial

instruments, the terminal value would usually be derived rom the anticipated value o the



33



Underlying Business at Realisation. Tis will

usually necessitate making assumptions about

uture business perormance and developments

and stock market and other valuation ratios at theassumed Realisation date. In the case o equity

Investments, small changes in these assumptionscan materially impact the valuation. In the case o

non-equity instruments, the terminal value will

usually be a pre-dened amount, which greatly enhances the reliability o the valuation.

In circumstances where a Realisation is notoreseeable, the terminal value may be based

upon assumptions o the perpetuity cash owsaccruing to the holder o the Investment. Tese

circumstances (which are expected to be rare

in private equity) may arise where the Fundhas little ability to inuence the timing o a

Realisation and/or those shareholders that can

inuence the timing do not seek a Realisation.

3.7. In using the Discounted Cash Flows

(rom an Investment) valuation technique

to estimate the Fair Value o an Investment,the Valuer should derive the present value

o the cash ows rom the Investment using

reasonable assumptions and estimations

o expected uture cash ows, the terminal

value or maturity amount, date, and the

appropriate risk-adjusted rate that captures

the risk inherent to the Investment. Tis

valuation technique would generally be

applied to Investments with characteristics

similar to debt.

Te implied discount rate at initial investment

is adjusted over time or changes in market

conditions.

3.8. Industry Valuation Benchmarks A number o industries have industry-specic

valuation benchmarks, such as ‘price per bed’(or nursing-home operators) and ‘price per

subscriber’ (or cable television companies).

Other industries, including certain nancialservices and inormation technology sectors and

some services sectors where long-term contracts

are a key eature, use multiples o revenues as a

valuation benchmark.

Tese industry norms are oten based on the

assumption that investors are willing to pay orturnover (revenue) or market share, and that the

normal protability o businesses in the industry

does not vary much.

3.8. Te use o industry benchmarks is

only likely to be reliable and thereore

appropriate as the main basis o estimating

Fair Value in limited situations, and ismore likely to be useul as a sanity check

o values produced using other techniques.

3.9. Quoted InvestmentsPrivate Equity Funds may be holding Quoted

Instruments, or which there is an availablemarket price.

3.9 (i) Instruments quoted on an Active

Market should be valued at the price within the bid / ask spread that is most

representative o Fair Value on the

Measurement Date. Te Valuer should

consistently use the most representative

point estimate in the bid /ask spread.

For certain Quoted Instruments there is only

one market price quoted, representing, orexample, the value at which the most recent

trade in the instrument was transacted.

For other Quoted Instruments there are two

market prices at any one time: the lower ‘bid’price quoted by a market maker, which he will

pay an investor or a holding (i.e. the investor’s

disposal price), and the higher ‘ask’ price, whichan investor can expect to pay to acquire a holding.

However, as an alternative to the bid price (where

not required by regulation), is the mid-marketprice (i.e. the average o the bid and ask prices),

where this is considered the most representative

point estimate in the bid/ask spread.



34



As previously noted, Fair Value measurements

should not include a premium or discount that

is inconsistent with the instrument (Unit o

Account) being valued. Blockage Factors are notallowed by accounting standards.

3.9 (ii) Blockage Factors that reect size

as a characteristic o the reporting entity’s

holding (specically, a actor that adjusts

the quoted price o an asset because the

market’s normal daily trading volume is

not sufcient to absorb the quantity held

by the entity) should not be applied.

I a market is deemed not to be active, the

Valuer would supplement the use o quoted

prices with additional valuation techniques tomeasure Fair Value.

3.9 (iii) Discounts may be applied to

prices quoted in an Active Market i

there is some contractual, Governmental

or other legally enorceable restriction

attributable to the security, not the holder,resulting in diminished Liquidity o the

instrument that would impact the price

a Market Participant would pay at the

Measurement Date.

In determining the level o discount to apply,

the Valuer should consider the impact on theprice that a buyer would pay when comparing

the Investment in question with an identical but

unrestricted holding.

A Valuer may consider using an option pricing model to value the impact o this restriction on

realisation. However, in practice or restrictions

which only cover a limited number o reporting periods, this is simplied to a simple

mathematical discount to the quoted price.

Te discount applied should appropriately reect

the time value o money and the enhanced risk

arising rom the reduced Liquidity. Te discount

used is a matter o judgement inuenced by expected volatility which should reduce to zero

at the end o the restriction period.

4. Valuing FundInterests4.1. General

4.1. In measuring the Fair Value o aninterest in a Fund the Valuer may base

their estimate on their attributable

proportion o the reported Fund Net Asset

Value (NAV) i NAV is derived rom the

Fair Value o underlying Investments and

is as o the same Measurement Date as that

used by the Valuer o the Fund interest,

except as ollows:

(i) i the Fund interest is actively traded

Fair Value would be the actively traded price;

(ii) i management has made the

decision to sell a Fund interest or

portion thereo and the interest

will be sold or an amount other

than NAV, Fair Value would be the

expected sales price.

Fund-o-Funds and investors in Private

Equity Funds must value their Interest in anunderlying Fund at regular intervals to support

their nancial reporting. Historically, the Net Asset Value (‘NAV’) based on the underlying

Fair Value o the Investments, as reported by

the Manager, has been used as the basis orestimating the Fair Value o an interest in an

underlying Fund.11

11 FASB ASC opic 820 (820-10-15-4 & 820-10-35-59 to 62) allows the use o NAV to measure Fair Value i certain conditions are met: theinvestment is in a Fund (as dened by ASC opic 946); and underlying investments are reported at Fair Value as o the Measurement Date. IFRS issilent on the use o NAV and provides no urther guidance on how to measure the Fair Value o a Fund interest. Generally under IFRS, NAV is used asa starting point with the Valuer assessing that reported net assets are valued compliant with Fair Value principles.



35



Fair Value or an underlying Fund interest is, at

its most basic level, equivalent to the summation

o the estimated value o underlying Investments

as i realised on the Measurement Date. Teproceeds rom such a realisation would ow

through to the investor in an amount equalto NAV. Tis concept makes particular sense

or closed-end Fund investors who realise cash

returns on their Investment when realisationevents occur through the sale o the underlying

portolio companies.

As an investor in a Fund, reliance on a reportedNAV provided by the investee Fund manager

can only be used by the investor to the extentthat they have evidence that the reported NAV

is appropriately derived using proper Fair

Value principles as part o a robust process.ypically, evidence as to the Fair Value approach,

procedures and consistency o application is

gathered via initial due diligence, on-going monitoring, and review o nancial reporting

and governance o the investee Fund by the

investor entity.

Tereore, NAV. when rigorously determined

in accordance with the principles o Fair Valueand these Valuation Guidelines provides the best

estimate upon which to base the Fair Value o anInterest in a Fund.

4.2. Adjustments to Net Asset Value

4.2. I the Valuer has determined that the

reported NAV is an appropriate starting point or determining Fair Value, it may

be necessary to make adjustments based

on the best available inormation at the

Measurement Date. Although the Valuer

may look to the Fund Manager or the

mechanics o their Fair Value estimation

procedures, the Valuer needs to have

appropriate processes and related controls

in place to enable the Valuer to assess

and understand the valuations received

rom the Fund Manager. I NAV is not

derived rom the Fair Value o underlying

Investments and / or is not as o the

same Measurement Date as that used by

the Valuer o the Fund interest, then the

Valuer will need to assess whether such

dierences are signicant, resulting in the

need to adjust reported NAV.

Factors which might result in an adjustment tothe reported NAV would include the ollowing:

• signicant time elapsing between the

Measurement Date o the Fund NAV and theValuer entity’s Measurement Date. Tis would

be urther exacerbated by: − the Fund making subsequent Investments

or achieving realizations;

− the Valuer becoming aware o subsequentchanges in the Fair Value o underlying

investee companies;

− subsequent market changes or othereconomic conditions changing to impact

the value o the Fund’s portolio;

•

inormation rom an orderly Secondary ransaction i sufcient and transparent;

• the appropriate recognition o potential

perormance ees or carried interest in theFund NAV;

• waived management ees included in NAV;

• impact o claw back provisions;

• any eatures o the Fund agreement that may

aect distributions but which are not capturedin the NAV;

•

materially dierent valuations by GPs orcommon companies and identical securities;and

• any other acts and circumstances which

might impact underlying Fund value.

NAV should be adjusted such that it isequivalent to the amount o cash that would

be received by the holder o the interest in the

Fund i all underlying Investee Companies were

realised as at the Measurement Date.



36



4.3. Secondary Transactions

4.3. When a Valuer o an interest knows

the relevant terms o a Secondary transaction in that particular Fund and

the transaction is considered orderly, the

Valuer must consider the transaction price

as one component o the inormation

used to measure the Fair Value o a Fund

interest.

Limited Secondary ransactions exist or Private

Equity Funds. External market transactions or

a Fund are typically inrequent, opaque andinormation is extremely limited. Secondary

prices are negotiated, may be inuencedby actors beyond Fair Value and based on

assumptions and return expectations that are

oten unique to the counter parties. In addition,inormation relevant to specic transactions

may not be deemed orderly and any pricing data

available may no longer be current.In the event that the investor in the Private

Equity Fund has decided to sell their interestin that Fund, then data known rom orderly

Secondary ransaction prices is likely to be

better evidence o Fair Value.

Any use o a Secondary ransaction price

requires considerable judgement. I orderly Secondary ransaction prices are available, but

are not deemed active, then such prices should

be augmented with other valuation inputs,

generally NAV.

4.4. Discounted Cash FlowsIn situations where a Valuer decides not to

use or cannot use NAV as a starting point ordetermining Fair Value and orderly Secondary

ransaction inormation is not available,

the primary valuation technique available toestimate Fair Value or a Fund interest would

be to perorm a discounted cash ow analysiso all uture cash ows or the Fund. Given the

subjectivity involved, it is not expected that the

DCF alternative would be used oten in practice.



37





Section III: Application Guidance



39



IntroductionSection II sets out the Valuation Guidelines and

principles which represent best practice or thevaluation o private equity and venture capital

Investments. Tis section, Section III, sets out

urther practical guidance to the application o those principles and techniques to specic cases.

5. SpecicConsiderations5.1. Insider Funding RoundsTe price at which a unding round takes place

may be a clear indicator o Fair Value at that

date. When using the Price o Recent Investmentvaluation technique, the Valuer should consider

whether there are specic circumstancessurrounding that round o Investment which may

reduce the reliability o the price as an indicator o

Fair Value.

Where there is a round o nancing that involves

only existing investors o the Underlying Business in the same proportion to their existing

Investments (insider round), the commercial

need or the transaction to be undertaken at FairValue may be diminished. Te Valuer needs to

assess whether the transaction was appropriately

negotiated and reected the Enterprise Value atthat date.

Nevertheless, a nancing with existing investors

that is priced at a valuation that is lower than the

valuation reported at the previous Reporting Date(insider down round) may indicate a decrease

in value and should thereore be taken into

consideration.

Insider down rounds may take various orms,

including a corporate reorganisation, i.e. a

signicant change in the common equity baseo a company such as converting all outstanding

preerred shares into common equity, combining outstanding preerred shares into a smaller

number o shares (share consolidation) or even

cancelling all outstanding shares beore a capital

increase.

It should be noted that a Board o Directors has

the legal obligation to set the price o newly issuedshares at Fair Value in the best interests o the

Company.

5.2. Distressed MarketMarkets rom which transaction data may be extracted may be viewed by Valuers to be

‘distressed markets’. A distressed market does not

mean that all transactions within that marketmay be deemed to be distressed and invalid

or use as comparative purposes, however anindividual transaction may be deemed not

orderly. In these situations signicant judgement

is needed when determining whether individualtransactions are considered orderly and thereby

are indicative o Fair Value.

When considering whether a transaction may

be deemed to be distressed or orced (e.g. not

orderly), the Valuer may include such matters asthe ollowing indicators in their consideration:

• a legal requirement to transact, or example a

regulatory mandate;

• a necessity to dispose o an asset immediately

and there is insufcient time to market theasset to be sold;

• the existence o a single potential buyer as a

result o the legal or time restrictions imposed;

• the seller is in or near bankruptcy or

receivership (i.e. the seller is distressed);

• there was not adequate exposure to the marketto allow or usual and customary marketing

activities; and

• the transaction is considered an outlier by Market Participants when considering other

similar transactions o the same or similar

asset.

Determining whether a transaction is not orderly

or merely reects current distressed marketconditions requires judgment.



40



5.3. Higher Ranking InstrumentsMany acquisition structures include third party

debt which ranks higher than the interests o

the Fund, which is deducted rom AdjustedEnterprise Value to estimate the Attributable

Enterprise Value.

For certain transactions, this debt is actively

traded and may be acquired by the Investee

Company or the Fund in the market at a price which is at a discount to the par value.

In calculating the Attributable Enterprise Value,

the Valuer should deduct rom the EnterpriseValue the amount which is expected to be repaidin settlement o this debt at the Measurement

Date. ypically this is the par value since the

debt is generally repayable at the time o disposalo the Investee Company and the Enterprise

Value has been estimated on the basis o disposal

at the Measurement Date as this is how MarketParticipants in the Private Equity industry view

the realization process.

When debt must be repaid upon the sale o the

Underlying Business, then a Market Participant

may deem the Fair Value o debt to equal thePar Value o debt (or the amount to be repaid)

or purposes o determining the Fair Value o equity. It should be noted however, that i debt

is a standalone Investment, a Market Participant

would take into account risk, coupon, timeto expected repayment, and other market

conditions in determining the Fair Value o the

debt instrument, which would generally not beequivalent to Par Value (see 5.5 below).

Where the debt is trading at a discount to par,this lower amount would not normally be

deducted rom the Enterprise Value until the

Investee Company or the Fund has acquired thatdebt in the market at that value and intends to

cancel the debt rather than seek repayment atpar.

5.4. Bridge FinancingFunds, or related vehicles, may grant loans to an

Underlying Business pending a new round o

equity nancing (Bridge nancing). Tis may beprovided in anticipation o an initial Investment

by the Fund, or ahead o a proposed ollow-on

Investment.

In the case o an initial Investment, where

the Fund holds no other Investments in theUnderlying Business, the Bridge loan should

be valued in isolation. In these situations andi it is expected that the nancing will occur in

due course and that the Bridge loan is merely ensuring that unds are made available early, costis likely to be the best indicator o Fair Value.

I it is anticipated that the company may havedifculty arranging the nancing, and that its

viability is in doubt, the Valuer should reassess

Fair Value.

I the bridge nance is provided to an existing

Investee Company in anticipation o a ollow on Investment, the bridge nance should be

included, together with the original Investment,

as a part o the overall package o Investmentbeing valued to the extent a Market Participant

would be expected to combine the overallInvestment.

5.5. Mezzanine Loans

Mezzanine loans are one o the commonly used sources o debt nance or Investments.ypically these will rank below the senior debt,

but above shareholder loans or equity, bear

an interest rate appropriate to the level o risk being assumed by the loan provider and may

have additional value enhancing aspects, such as

warrants.

Oten these are provided by a party other than

the equity provider and as such may be the only instrument held by the Fund in the Underlying

Business. In these situations, the mezzanine loan



41



should be valued on a standalone basis. Te

price at which the mezzanine loan was issued is a

reliable indicator o Fair Value at that date.

Te Valuer should consider whether any

indications o deterioration in the value o theUnderlying Business exist, which suggest that

the loan will not be ully recovered. Te Valuer

should also consider whether any indications o changes in required yield exist, which suggest

that the value o the loan has changed.

Tere are generally limited market opportunities

or the holders o mezzanine loans to trade.Tere are agencies which regularly quote prices

on these types o loans; however transactions

cannot always be undertaken at the indicativeprices oered. Prices reported o transactions

should be considered by the Valuer as to whether

these are a reasonable indication o Fair Value.

Since the cash ows associated with a mezzanine

loan may be predicted with a reasonable amount

o certainty, typically these are valued on thebasis o a DCF calculation.

Warrants attached to mezzanine loans should be

considered separately rom the loan. Te Valuershould select a valuation technique appropriate

to valuing the Underlying Business and apply

the percentage ownership that the exercised warrants will coner to that valuation.

In the event that the warrant position issignicant, the Valuer may consider utilising one

o the sophisticated option and warrant pricing

models.

I the mezzanine loan is one o a number o

Investments held by a Fund in the Underlying Business, then the mezzanine loan and any

attached warrants should be included as a part o the overall package o Investment being valued,

to the extent that a Market Participant would

combine the Investments. Depending on theacts and circumstances o the Investments held

by a und, the Fair Value o a mezzanine loan

may be equal to the par value o the loan i it

must be repaid upon a change o control.

5.6. Rolled up Loan InterestMany nancial instruments commonly used in

private equity Investments accumulate interest

which is only realised on redemption o theinstrument (e.g. deep discount debentures or

Payment-in-Kind Notes).

In valuing these instruments, the Valuer should

assess the expected present value o the amount

to be recovered rom these instruments. Teconsideration o recoverable amount will

also include the existence o any reasonably anticipated enhancements such as interest rate

step increases.

In a typical nancing package, these are

inseparable rom the underlying equity

Investment and will be realised as part o a saletransaction.

Te dierence between the estimated recoverableamount (i in excess o the original cost) should

be spread over the anticipated lie o the note

so as to give a constant rate o return on theinstrument.

5.7. Indicative OersIndicative oers received recently rom a third

party or the Underlying Business may providea good indication o Fair Value. Tis will apply

to oers or a part or the whole Underlying Business as well as other situations such as price

indications or debt or equity renancing.

However, beore using the oer as evidence

o Fair Value, the Valuer should consider the

motivation o the party in making the oer.Indicative oers may be made deliberately

high or such reasons as: to open negotiations,gain access to the company or made subject tostringent conditions or uture events.



42



Similarly they may be deliberately low i the

oeror believes that the vendor may be in a

orced sale position, or to take an opportunity to

increase their equity stake at the expense o otherless liquid stakeholders.

In addition, indicative oers may be made on

the basis o insufcient detailed inormation to

be properly valid.

Tese motivations should be considered by

the Valuer; however it is unlikely that a rmconclusion can be drawn.

Accordingly, indicative oers may provide useul

additional support or a valuation estimated

by one o the valuation techniques, but aregenerally insufciently robust to be used in

isolation.

5.8. Impacts rom StructuringFrequently the structuring o a privateequity Investment is complex with groups o

stakeholders holding dierent rights which

either enhance or diminish the value o their interests, depending on the success or

disappointments o the Underlying Business.

Valuations must consider the impact o uture

changes in the structure o the Investment whichmay materially impact the Fair Value. Tese

potential impacts may take several dierent legal

orms and may be initiated at the Fund’s option,automatically on certain events taking place, or

at the option o another party.

Common clauses include, but are not limited to

• stock options and warrants;

• anti-dilution clauses;

• ratchet clauses;

• convertible debt instruments;

• liquidation preerences;

•

commitments to take up ollow-on capitalInvestments.

Tese rights should be reviewed on a regular

basis to assess whether these are likely to be

exercised and the extent o any impact on value

o the Fund’s Investment. At each MeasurementDate, the Valuer should determine whether these

rights are likely to be exercised.

In assessing whether rights are likely to be

taken up by stakeholders, the Valuer may limittheir consideration to a comparison o the

value received by the exerciser against the cost

o exercising. I the exerciser will receive anenhancement in value by exercising, the Valuer

should assume that they will do so.

Te estimation o Fair Value should be

undertaken on the basis that all rights thatare currently exercisable and are likely to be

exercised (such as options), or those that occur

automatically on certain events taking place(such as liquidation preerences on Realisation,

or ratchets based on value), have taken place.

Consideration should also be given to whetherthe exercise price will result in surplus cash

arising in the Investee Company.

Notwithstanding the above, when considering the impact o liquidation preerences, the Valuer

should include in their assessment the likelihood

o the Fund receiving their ull contractual rightunder the preerence. In practice, ull value or

the preerence may not be achieved, particularly

when this would result in other investors who are integral to the sale process (such as

a continuing management team) receiving a

signicantly reduced value or their Investment.

5.9. Contractual RightsIncreasingly, additional consideration dependent

upon uture events is used as a strategy or

exiting an Investment. Upon the sale o an

Underlying Business some considerationis received, with additional consideration

potentially being received in the uture. Tecontractual right to uture consideration can be



43



very benecial, especially or deals encircled with

uncertainty; where signicant potential value o

a business lies in the outcome o uture events.

Te contractual right to uture consideration isoten described as “contingent consideration.”

Negotiating a contract or uture consideration

allows sellers to close a deal with the ability

to realize a price they think is air, taking intoaccount uture perormance they deem both

valuable and likely, but that has not yet been

achieved. For buyers, the ability to contractually delay paying or value beore it ully crystallizes

protects their Investment.

Because the interpretation o accounting

standards diers and the treatment o so-called“gain contingencies” is not uniorm, the Fair

Value o contractual rights (gain contingencies)

may not have been recorded in a Fund’snancial statements or related notes. However,

in the context o a private equity or venture

capital Investment, the sale o an Investment

that includes potential uture considerationis both contractual and qualies as a nancial

instrument. Said dierently, a contractual rightexists. Te right itsel is not contingent; the

uture consideration is variable depending onuture events and outcomes. In many ways

this is no dierent than the ownership in an

underlying investee company; an ownershipright exists; the uture cash ows that will

result rom that ownership right are dependent

(contingent) upon uture events. Te sameconcept applies to warrants or options. Te

ultimate value is contingent upon uture events.

o avoid conusion, and misapplication o accounting principles, it is more appropriate to

describe “contingent consideration” in its legal

orm, that being a “contractual right” to utureconsideration.

Due to the unique aspects o these types o

rights, it is likely that an income approach

(discounted cash ow) will be the best toolto estimate Fair Value. Tis requires the

development o expected cash ows and an

appropriately chosen discount rate. Estimated

cash ows in their simplest orm are determined

by assessing the probability o payment atvarious points in time.

Cash ow assumptions should include the

estimation o the likelihood and timing o

various possible outcomes or achievemento the specied contingency and/or consider

scenario-based projections relevant to the

specied contingencies. Te key starting pointis to decompose the actors that would lead to

a contingency being met (or not being met).Te Valuer must identiy sources o data to be

used to support assumptions. It is oten possible

to keep the analysis relatively simple while stillincorporating the material complexities o the

contractual right, especially i the probability

o success is low or the amount o the utureconsideration is small. As noted above, even

though the accounting treatment o contractual

rights diers (recognition as an asset in the

nancial statements vs. disclosure in notes tonancial statements), Investors generally are in

need o a Valuer’s estimate o the Fair Value o such contractual rights or contingent gains.

5.10. Mathematical ModelsUnlike derivatives and debt markets,mathematical option pricing models have

not seen wide usage in the private equity

marketplace. Such models are rarely used by Market Participants to determine the transaction

price or an Investment. However, or certain

early stage Investments, option pricing models(OPM) or probability-expected weighted return

models (PWERM) are deemed by some to

provide a reliable indication o Fair Value. Indue course the IPEV Board expects to provide

additional guidance on the use o OPM,

PWERM and other techniques on the IPEV

website, http://www.privateequityvaluation.com/, and in uture updates to these Valuation

Guidelines.




Appendix: Denitions



45



Te ollowing denitions shall apply in these Guidelines:

Active Market A market in which transactions or an asset take place with

sufcient requency and volume to provide pricing inormationon an on-going basis. A nancial instrument is regarded as

quoted in an Active Market i quoted prices are readily andregularly available rom an exchange, dealer, broker, industry

group, pricing service or regulatory agency, and those prices

represent actual and regularly occurring market transactions onan arm’s length basis. Te necessary level o trading required to

meet these criteria is a matter o judgement.

Adjusted Enterprise Value Te Adjusted Enterprise Value is the Enterprise Value adjusted

or actors that a Market Participant would take into account,including but not limited to surplus assets, excess liabilities,contingencies and other relevant actors.

Attributable Enterprise Value Te Attributable Enterprise Value is the Adjusted Enterprise

Value attributable to the nancial instruments held by the Fund

and other nancial instruments in the entity that rank alongsideor beneath the highest ranking instrument o the Fund.

Blockage Factor An adjustment that adds a discount or premia to the quotedprice o a security because the normal daily trading volume,

on the exchange where the security trades, is not sufcient toabsorb the quantity held by the Fund. Blockage Factors are notpermitted under US GAAP or IFRS.

Distressed or Forced Transaction A orced liquidation or distress sale (i.e., a orced transaction)is not an Orderly ransaction and is not determinative o Fair

Value. An entity applies judgement in determining whether a particular transaction is distressed or orced.

Enterprise A commercial company or business nanced through debt andequity capital provided by debt holders and owners.

Enterprise Value Te Enterprise Value is the total value o the nancial instrumentsrepresenting ownership interests (equity) in a business entity plus

the value o its debt or debt-related liabilities, minus any cash or

cash equivalents available to meet those liabilities.

Fair Value Fair Value is the price that would be received to sell an asset

in an Orderly ransaction between market participants givencurrent market conditions at the Measurement Date.

Fund or Private Equity Fund Te Fund or Private Equity Fund is the generic term used in these

Valuation Guidelines to reer to any designated pool o Investmentcapital targeted at all stages o private equity Investment romstart-up to large buyout, including those held by corporate entities,

limited partnerships and other investment vehicles.



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Fund-of-Funds Fund-o-Funds is the generic term used in these ValuationGuidelines to reer to any designated pool o investment capital

targeted at investment in underlying Private Equity Funds.Investee Company Te term Investee Company reers to a single Enterprise or group

o Enterprises in which a Fund is directly invested.

Investment An Investment reers to the individual nancial instruments held

by the Fund in an Investee Company.

Liquidity A measure o the ease with which an asset may be converted

into cash. A highly liquid asset can be easily converted intocash; an illiquid asset may be difcult to convert into cash.

Liquidity represents the relative ease and promptness with

which an instrument may be sold when desired.

Market Participants Market Participants are potential or actual willing buyers or willing sellers when neither is under any compulsion to buy or

sell, both parties having reasonable knowledge o relevant acts

and who have the ability to perorm sufcient due diligence inorder to be able to make orderly investment decisions related

to the Enterprise in the principal (or most advantageous)

market or the asset.

Marketability Te time required to eect a transaction or sell an Investment.

Accounting standards dictate that the Marketability periodbegins sufciently in advance o the Measurement Date such

that the hypothetical transaction determining Fair Value

occurs on the Measurement Date. Tereore, accounting standards do not allow a discount or Marketability when

determining Fair Value.

Measurement Date Te date or which the valuation is being prepared, which oten

equates to the reporting date.

Most Advantageous Market Te market that maximizes the amount that would be receivedto sell an asset ater taking into account transaction costs andtransportation costs.

Net Asset Value (‘NAV’) NAV o a Fund is the amount estimated as being attributable tothe investors in that Fund on the basis o the Fair Value o the

underlying Investee Companies and other assets and liabilities.

Orderly Transaction An orderly transaction is a transaction that assumes exposure

to the market or a period prior to the Measurement Date to

allow or marketing activities that are usual and customary or

transactions involving such assets; it is not a Forced ransaction.Principal Market Te market with the greatest volume and level o activity or the

potential sale o an asset.



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Quoted Instrument A Quoted Instrument is any nancial instrument or whichquoted prices reecting normal market transactions are readily

and regularly available rom an exchange, dealer, broker,industry group, pricing service or regulatory agency.

Principal Market Te market with the greatest volume and level o activity orthe potential sale o an asset.

Realisation Realisation is the sale, redemption or repayment o anInvestment, in whole or in part; or the insolvency o an Investee

Company, where no signicant return to the Fund is envisaged.

Secondary Transaction A Secondary ransaction reers to a transaction which takes

place when a holder o an unquoted or illiquid interest in a

Fund trades their interest to another party.

Unquoted Instrument An Unquoted Instrument is any nancial instrument other thana Quoted Instrument.

Underlying Business Te Underlying Business is the operating entities in whichthe Fund has invested, either directly or through a number o

dedicated holding companies.

Unit of Account An accounting term which identies the level at which an

asset is aggregated or disaggregated or Fair Value recognition

purposes. Unit o Account is dictated by individual accounting standards which are subject to interpretation. Because Fair

Value accounting standards seek to reect the economic

behaviour and the perspective o Market Participants theseValuation Guidelines general use a Market Participant view

in assessing the level o aggregation or disaggregation. For

example where accounting guidance is open to interpretation,i a Market Participant would purchase an interest in a private

company, not ocusing on individual shares; the unit o account would be the overall interest purchased. However,

i accounting standards clearly dene unit o account, suchguidance should be ollowed.

Valuer Te Valuer is the person with direct responsibility or valuing

one or more o the Investments o the Fund or Fund-o-Funds.



Endorsing Associations



AFIC(Association Française des Investisseurspour la Croissance)

Established in 1984, AFIC has 280 active memberscovering all types o private equity activities in France.In addition, AFIC has 200 associate members roma wide range o related proessions who support and

advise investors and entrepreneurs in the structuring andmanagement o their partnerships.

By virtue o its responsibilities in the areas o compliance,controlling and establishing generally accepted practices, AFIC is one o two associations recognized by theFrench Financial Market Authority (AMF). Managementcompanies must be AFIC members in order to be certiedby the AMF. AFIC is the only proessional associationocused on the private equity business.

AMIC(Moroccan Venture Capital & Private Equity Association)

Founded in 2000, AMIC is an independent proessional

association whose mission is to unite, represent and promotethe private equity proession to local and internationalinvestors, entrepreneurs and governmental bodies.

AMIC counts 20 active members and 16 associatedmembers (see list o members on our website).

Te main mission o the association is to strengthen theprivate equity industry’s competitiveness in Morocco andabroad through:• Eective and clear communication on the private equity

industry • Executing reliable reports and surveys on the state o

private equity in Morocco• Active participation in discussions on any drat law

regulating the sector• Establishing a good governance and ethics code or the

private equity industry and promoting compliance withsuch code

• Providing support services to members on regulatory issues related to the proession

• Development o a quality training program on allaspects o the private equity industry

Contact: Françoise Giraudon – De Donder [email protected]

Address: 23, Boulevard Mohamed Abdou (siège CGEM) –Quartier Palmiers – 20 340 Casablanca – Morocco

www.amic.org.ma

AMEXCAP(Asociación Mexicana de Capital Privado, AC)

Te Mexican Private Equity Association (AMEXCAP) is a non or prot organization, created in 2003, representing venture capital/private equity unds that actively invest inMexico. Additionally, other afliates that play an importantrole in the sector are members o the Association such as topconsulting and law rms that are active in Mexico.

AIFI(Italian Private Equity and Venture CapitalAssociation)

AIFI was ounded in May 1986 in order to promote,develop and institutionally represent the private equity and venture capital activity in Italy.

Te Association is a non-prot organisation whose main

activities are: to create a avourable legal environmentor the private equity and venture capital investmentactivity, to analyse the Italian private equity marketcollecting statistical data, to organize business seminarsand specialized courses addressed to institutional investorsand to people interested in operating within the industry,to publish research papers regarding specic topicsabout the private equity market, to build up stable andsolid relationships with other National Venture Capital Associations and key players in the international privateequity market.

In order to carry out the above-mentioned activities, AIFI

can rely both on its permanent sta and on dierentechnical Committees established with the task to carry out activities o study on specic matters and projects.

49International Private Equity and Venture Capital Valuation Guidelines l Edition December 2012



ASCRI ASCRI is a non-prot making association that was set upin 1986, to promote and develop the venture capital andprivate equity activity in Spain and represent, manage anddeend its members’ proessional interests. Te Associationstimulates the promotion and inormation analysis in theventure capital/private equity sector in Spain, and providesthe contact between Ofcial Organisations, investors,proessional advisers, business schools and other relevantinstitutions. At the end o May 2005, ASCRI had 84ull members and 28 associate members. Te ASCRI’smain activities are: Research activity, Organisation o

dierent events such as: Annual General Assembly, ASCRICongress, raining Seminars and Conerences/Workshops,Communication o investment opportunities between ASCRI members, and Institutional and lobbying activity.

APCRI(Portuguese Private Equity and VentureCapital Association)

APCRI was established in 1989 and is based in Lisbon. APCRI represents the Portuguese private equity andventure capital sector and promotes the asset class. APCRI’srole includes representing the interests o the industry to

regulators and standard setters; developing proessionalstandards; providing industry research; proessionaldevelopment and orums, acilitating interaction betweenits members and key industry participants including institutional investors, entrepreneurs, policymakers andacademics. APCRI’s activities cover the whole range o private equity: venture capital (rom seed and start-upto development capital), buyouts and buyins. APCRIrepresents the vast majority o private equity and venturecapital in Portugal. APCRI has 16 ull members and 5associate members. Full members are active in making equity investments primarily in unquoted companies. Te

associate membership can include those rms who investdirectly in private equity but or whom this is not theirprincipal activity, advisory rms experienced in dealing withprivate equity and educational or research based institutionsclosely associated with the industry.

ATIC(Tunisian Association o Capital Investors)

Te unisian Association o Capital Investors (AIC) wascreated in 2004 to represent unisian managers o venturecapital or private equity unds, whether using the SICAR,FCPR or Seed Capital type o vehicle. It is the ofcialindustry association vis-a-vis public authorities.

Goals o AIC: • Boost private investment through private equity resources; • Oer a strategic support to PE players in unisia and

contribute to their good governance; • Lobby on behal o the PE players with the Ministry

o Finance, the market authorities, the parliament,and other governmental entities in order to help theinvestment environment and the regulation evolve andbecome more investor riendly;

• Help grow, develop and rebuild the economy; • Help improve national productivity.

Committees, and working groups:

Te purpose o these bodies is to come up withrecommendations to reorm the proession: • Investor relations committee; • Committee or judicial, legislative, and scal issues; • Committee or statistics and communication; • Committee or training; • Committee or research; • Fiscal Committee; • Committee or Investment.

Te AIC has 45 members: • 6 regional SICARs • 9 banks, research rms, lawyers, etc.

•

7 Management Companies/GPs • 16 Banking SICARs • 18 Group SICARs − Banking SICARs are unds (captive subsidiaries) o

banking institutions that invest in SMEs; − Private SICARs are afliates o amily-owned groups in

unisia that invest in afliates o the groups; − Te Management Companies are independent VC

or PE teams that manage unds raised rom local andinternational third parties;

− Regional SICARs are special unds created by thegovernment to oster investments in challenging regionsthat lack private investments.

Most o these unds have been created thanks to scalincentive schemes implemented by the government to spurprivate investment in the country, either in specic sectorsor in less developed regions.

50






AVCA(Arican Venture Capital Association)

AVCA is an industry association supporting Aricanprivate equity and venture capital investors throughresearch, inormation dissemination, industry gatherings,advocacy, and training.

We represent Arican private equity and venture capitalrms, institutional investors, oundations, internationaldevelopment institutions and global proessional servicerms, amongst others.

AVCO(Austrian Private Equity and Venture CapitalOrganisation)

AVCO is the National Association o Austria’s private equity and venture capital industry, which covers more than 90%o the Austrian private equity market with its members.

• It works as a knowledgeable partner and independent

inormation point or journalists, entrepreneurs,potential investors, private and public institutionsas well as international bodies that are interested in Austria’s private equity industry, its development andstructure as well as its activities and perormance.

• It acts as the ofcial representative o the industry actively engaged in improving the tax-related, legal andeconomic policy environments in close connection withrespective policy makers.

• As a proactive networking institution it promotes co-operation inside the industry as well as interaction withcomplementary players rom other elds in order to

intensiy inormation ows and create learning loops. • In addition it takes the role o an interace to internationalorganisations exchanging experience, inormation andknowledge with other Private Equity and Venture Capital Associations in Europe, with the European Commissionand urther relevant institutions in order to putinternational best practice at work or Austria.

Currently AVCO is engaged to initiate internationally avourable private equity und structures or Austria and recently AVCO has published Investor RelationsGuidelines – behavioural standards or its members vis-à-vis their und investors – in order to raise transparency

and aith in private equity as a proessional asset class in Austria.

In line with these eorts AVCO welcomes theInternational Private Equity and Venture CapitalGuidelines and will be eager to support their introductionand accurate application by its members.

AVCAL(Australian Private Equity and Venture CapitalAssociation)

AVCAL represents the interests o Australia’s venturecapital and private equity industry. AVCAL’s 50 investormembers have A$10 billion under management.

AVCAL’s roles include: promotion o the industry,education o practitioners, public policy development,

staging networking events, application o valuation &disclosure guidelines, benchmarking IRRs, development o industry standard Limited Partnership agreement. AVCALconducts about 40 networking events annually across Australia, and leverages its online presence at www.avcal.com.au or maximum efciency.

51International Private Equity and Venture Capital Valuation Guidelines l Edition December 2012



52



BVCA(The British Private Equity & Venture CapitalAssociation)

Te British Private Equity & Venture Capital Association(BVCA) is the industry body and public policy advocateor the private equity and venture capital industry in theUK. We drive orward the case or private equity and

venture capital as the engine room o entrepreneurshipand economic growth. As our members support growing businesses, so we support the collective impact o theirinvestment by demonstrating its value to Government, themedia and society at large.

More than 500 rms make up the BVCA membershipand this number continues to grow. We represent 230private equity, midmarket and venture capital rms withan accumulated total o over £200 billion unds undermanagement; as well as nearly 300 proessional advisory rms, including legal, accounting, regulatory and tax advisers, corporate nanciers, due diligence proessionals,

environmental advisers, transaction services providers,and placement agents. Additional members includeinternational investors and unds-o-unds, secondary purchasers, academics and ellow national private equity and venture capital associations globally.

We provide our members and the wider industry community with a comprehensive portolio o servicesand best practice standards including leading proessionaldevelopment courses, research, networking opportunities,proprietary publications and topical conerences, alldesigned to ensure our members and their teams haveaccess to the broad range o skills and tools required to

drive their rms and the industry orward.

www.bvca.co.uk

+44 (0)20 7420 1800

BVA(Belgian Venture Capital & Private Equity Association vzw/asbl)

BVA was ounded in 1986 as a proessional association.

Its mission is to: • Animate the Belgian private equity and venture capital

industry by deploying a series o activities or itsmembers and or other stakeholders in the prosperity o the VC/PE sector in Belgium. Te objectives o the main animation activities are: to oster activenetworking amongst members o the BVA and betweenmembers o the BVA and other third parties, to provideextensive inormation to its members on all topicsrelevant to the VC/PE industry, to improve the quality o the operation o the sector.

• Promote the well-being o the Belgian private equity and venture capital industry towards all relevant thirdparties. Te objectives o the promotional activities are:− to pro-actively represent the Belgian VC/PE

industry to third parties as the industry’s recognizedspokesperson, to conduct active lobbying or (i)improvements to or (ii) the removal o obstaclesrom the structural context in which the BelgianVC/PE industry operates, to contribute to thecontinuous development o business in our industry.



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CAPE(China Association o Private Equity)

Te CAPE is a voluntary union and non-prot socialgroup, jointly established by private equity industry players. CAPE has been guided and supported by relevant state authorities; Adhering to the principleso “Standardization, Internationalization, and

Marketization”, it provides services to various undsand intermediary institutions registered in China. We are also committed to building the sel-regulatory discipline o the PE industry, saeguarding the legitimaterights and interests o members, improving member’sproessional capabilities, strengthening communicationand cooperation among members as well as domesticand oreign PE investors, in order to promote the sounddevelopment o China’s PE industry.

CAPE’s main tasks are: • Building the sel-regulatory mechanisms o the PE

industry • Promoting the sound operation o China’s PE industry and improving the regulatory environment

• Providing series o und registration services • Organizing relevant activities, building a

communications platorm or industry players • Building an industry database, media platorm,

education and training system; improving researchcapability

• Cooperating with oreign institutions, upgrading industrial inuence

www.chinacape.org

BVK(Bundesverband Deutscher Kapitalbeteiligungs - gesellschaten –German Private Equity and Venture CapitalAssociation e. V.)

BVK was ounded in 1989. BVK represents most o theGerman private equity and venture capital rms as well as

the German branches o oreign private equity and venturecapital rms. As per March 31, 2005, BVK representedmore than 180 private equity and venture capital rms. Apart rom ull membership BVK oers associatemembership to companies and organizations working inthis particular business sector, i.e. accountants, lawyers,consultants etc.

BVK serves as a link between government and businessand represents its members’ views, needs and problems while supplying inormation and discussing any particularpolitical and economic subject with the relevantgovernmental institutions.

Science and research are becoming more and moreinterested in private equity and venture capital issues.BVK supports universities, colleges and their students withtheir research activities and problem solving.

On the international level BVK exchanges inormation with other national organizations in the economic sectorand other international private equity and venture capitalassociations.



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CVCA(Canada’s Venture Capital & Private Equity Association)

Te CVCA – Canada’s Venture Capital & Private Equity Association, was ounded in 1974 and is the sole nationalrepresentative o Canada’s venture capital and private equity industry. Its over 1800 members are rms and organizations which manage the majority o Canada’s pools o capital

designated to be committed to venture capital and privateequity investments.

CVCA members’ collectively manage over $85 billion.CVCA’s members actively collaborate to increase the ow o capital into the industry and expand the range o protableinvestment opportunities.

Tis is accomplished by the CVCA undertaking a widevariety o initiatives, ranging rom developing comprehensiveperormance and valuation statistics, education andnetworking activities to promoting the industry’s interests with governments and regulatory agencies.

www.cvca.ca

CVCA(China Venture Capital Association)

Te China Venture Capital Association (“CVCA”) is a member-based trade organization established to promotethe interest and the development o venture capital (“VC”)and private equity (“PE”) industry in the Greater China Region. Currently CVCA has close to 100 member rms, which collectively manage over US$100 billion in venture

capital and private equity unds.

CVCA’s member rms have long and rich experience inprivate equity and venture capital investing worldwideand have made many successul investments in a variety o industries in China, including inormation technology,telecommunications, business services, media andentertainment, biotechnology, consumer products, andgeneral manuacturing.

CVCA’s mission is to oster the understanding o theimportance o venture capital and private equity tothe vitality o the Greater China economy and global

economies; to promote government policies conduciveto the development o VC and PE industry; to promoteand maintain high ethical and proessional standards; toacilitate networking and knowledge sharing opportunitiesamong members; and to provide research data, industry publications and proessional development or PE andVC investors.

CVCA is incorporated in Hong Kong with a representative ofce in Beijing. Funding or CVCA’sactivities come rom membership dues. CVCA’smembership is open to all China-ocused proessionalventure capital and private equity organizations and

corporate venture capital investors, and is also open to therelated proessional companies, which can join as CVCA associate members. CVCA has three liaison ofcers inShanghai, Xi’an and Silicon Valley respectively acilitating local networking and communication.



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EMPEA(Emerging Markets Private Equity Association)

Te Emerging Markets Private Equity Association(EMPEA) is an independent, global membershipassociation whose mission is to catalyze private equity andventure capital investment in emerging markets around

the world. With access to an unparalleled global network,EMPEA provides its members a competitive edge orraising unds, making good investments and managing exits to achieve superior returns. Our 300+ member rms,representing nearly 60 countries and more than US$1trillion in assets under management, include the leading institutional investors and private equity and venturecapital und managers across developing and developedmarkets.

EMPEA believes that private equity can provide superiorreturns to investors while creating signicant value orcompanies, economies and communities in emerging

markets. Despite signicant dierences across emerging market regions, private equity rms ace importantcommon challenges and opportunities. EMPEA’sglobal programming addresses these challenges throughindustry data, research, analysis, conerences, peer-to-peernetworking and advocacy.

In pursuit o its mission, EMPEA works closely withnational and regional venture capital associations, as wellas international organizations and local governments.

www.empea.org

CVCA(Czech Venture Capital and Private Equity Association)

CVCA is an association representing companies active inthe private equity and venture capital industry in the CzechRepublic. CVCA has ull members (private equity andventure capital und managers) and associated members

(companies providing advisory services to the private equity and venture capital industry). CVCA has 14 ull membersand 16 associated members as o May 2005.

CVCA’s priorities are: increasing the awareness aboutprivate equity/venture capital among entrepreneurs, stateadministration and general public, promoting interests o CVCA members in contact with the government and otherstate authorities, providing inormation on the private equity/venture capital industry in the Czech Republic, providing platorm or discussion among members o CVCA.

DVCA(Danish Venture Capital and Private Equity Association)

DVCA is an association with the goal o strengthening itsmember’s business, network, and competences. DVCA

includes a broad range o high tech investors in Denmark.Furthermore the organisation covers the whole investmentchain rom individual business angels over venture capitalcompanies to private equity and institutional investors.

DVCA was ounded in 2000 and was in 2004 merged with the ormerly known Danish Business Angel Network.Te association is situated in the Old Stock Exchange,Slotsholmsgade, Copenhagen.

www.dvca.dk.



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FVCA(The Finnish Venture Capital Association)

Te Finnish Venture Capital Association (FVCA) wasestablished in 1990. Te main objective o the FVCA is to enhance public condence in venture capital andprivate equity, and also to increase awareness o venturecapital and private equity as a part o established nancialmarkets.

Te FVCA aims to improve the conditions or venturecapital/private equity activity in Finland by overseeing the general interests and business-ethics o the industry together with governmental and other institutions as wellas by assisting in improving proessional practices, co-operating with other national associations, and generating statistics regarding the industry.

Te FVCA also strives to develop the business environmentby, among other things, contributing to the creation anddevelopment o appropriate legal, scal and operationalenvironments or investors as well as entrepreneurs.

Furthermore, the FVCA denes best practices andoperational principles or the industry, while requiring members to comply with the FVCA Code o Conduct.Te association also creates a unique network o contacts within the Finnish private equity and venture capitalindustry by providing a orum or exchange o views andexperiences among its members and interest groups.

Te FVCA has 39 ull members who represent the vastmajority o the Finnish venture capital and private equity companies. Full membership has been approved or equity investors and risk nanciers representing private and publicinvestment capital, captive unds and corporate ventures.

In addition, the FVCA has 51 associate members. Associate membership can be given to organizations andindividuals with an interest in the venture capital andprivate equity industry.

www.vca.

EVCA(European Private Equity and Venture CapitalAssociation)

Te EVCA is the voice o European private equity.

We represent venture capital, mid-market private equity, thelarge majority investors and institutional investors, speaking or 700 member rms and 400 afliate members.

In the last ve years, EVCA members have invested 160billion euros in 7,000 companies across Europe, making a valuable contribution to growth and innovation.

Te EVCA shapes the uture direction o the industry, whilepromoting it to stakeholders like entrepreneurs, businessowners and employee representatives.

We explain our industry to the public and engage in debate with policymakers, so that our members can conduct theirbusiness eectively.

Te EVCA is responsible or the industry’s proessionalstandards, demanding accountability, good governance and

transparency rom our members and spreading best practicethrough our training courses.

Tanks to our industry research teams, we have the acts when it comes to European private equity. Te EVCA has25 dedicated sta working in Brussels to make sure theindustry is heard.



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HKVCA(Hong Kong Venture Capital Association)

Hong Kong Venture Capital Association was established onNovember 12, 1987 with the objectives o promoting andprotecting the interests o the venture capital and privateequity industry, networking and cooperation on regionaland international ront, and in raising the proessionalstandards o the market.

Its 120 members are engaged in all levels o venture capital,expansion capital and buyout activities in China, Japan,Korea, Australia, aiwan, Tailand, Singapore, and othermarkets in Asia. It is committed to the promotion o theventure capital industry as a nancial and business partnerto businesses and the creation o an environment thatcreates sound partnerships. It is dedicated to developing a high standard o proessionalism in the market to ensureinvestor condence in the asset class.

Te Association provides an eective channel o communication or members to share inormation on

developments within the industry in Hong Kong/PRC as well as on a regional and international level. It also worksclosely with the government and various trade bodies tourther the interests o the industry.

HVCA(Hungarian Venture Capital and Private

Equity Association)HVCA represents virtually every major source o undsand expertise o private equity in Hungary. HVCA aimsto promote the development o the industry, and to createand ollow the highest possible proessional and ethicalstandards. HCVA was set up in 1991 and has developedconsiderably since then: the original ve members havegrown to 26 ull members, 29 associate members and 9individual members.

Te Association provides a regular orum or the exchangeo ideas among members, high-level discussions on thetopical issues o the venture capital and private equity

industry and the uture trends. As the ofcial representativeo the industry it is in constant discussion with the nancialand legislator institutions o the Hungarian State and withother proessional organisations.

ILPA(Institutional Limited Partners Association)

Te ILPA is a non-prot organization committed toserving limited partner investors in the global privateequity industry by providing a orum or: acilitating value-added communication, enhancing education in theasset class, and promoting research and standards in theprivate equity industry.

Initially ounded as an inormal networking group, theILPA is a voluntary association unded by its members.Te ILPA membership has grown to include more than138 member organizations rom 10 countries, who in totalhave assets under management in excess o two trillion U.S.dollars. Members o the ILPA manage more than US$300billion o private equity capital.

Te ILPA membership comprises corporate and publicpension plans, endowments and oundations, insurancecompanies and other institutional investors in privateequity. Te ILPA holds semi-annual meetings or members.

IVCA(Irish Venture Capital Association)

Te IVCA is the representative body o the venture capital

industry in Ireland. Te association was established in1985 to represent the views o its members and to promotethe Irish venture capital industry. We seek to encourageco-operation and best practices within the industry and toacilitate those seeking venture capital.

Te IVCA also continuously works with those individualsand organisations committed to ostering an economicand regulatory climate conducive to the growth anddevelopment o an enterprising economy.



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LAVCA(Latin American Private Equity and VentureCapital Association)

Te Latin American Private Equity and Venture Capital Association (LAVCA) is comprised o over 150 rms, romleading global investment rms active in the region to

local und managers rom Mexico to Argentina. Memberrms control assets in excess o $50 billion, directed atcapitalizing and growing Latin American businesses.

LAVCA plays an active role in the advocacy o soundpublic policy, and publishes annual ranking o the PE/VCenvironments o 12 key markets in Latin America.

LAVCA also produces targeted research and proprietary industry data, with nearly 200 rms reporting annualundraising, exits and investments. In addition, theassociation’s activities include investor education programstargeting global and Latin American LPs and networking orums in the US, Chile, Peru and Colombia.

www.lavca.org

LPEQ (LPEQ Listed Private Equity)

LPEQ is an association o international listed privateequity companies. Our goal is to increase awareness andunderstanding o listed private equity among institutionaland retail investors, their advisers, commentators andthe public.

www.LPEQ.com

LVCA(Latvian Venture Capital Association)

o promote the development o venture capital sector inLatvia, the six biggest companies that operate in the venturecapital sector in Latvia have ounded a public organization:the Latvian Venture Capital Association. Te ounders o the

association are und management companies that manageinvestment unds o dierent value and unction prole.

LVCA has the ollowing missions: to inorm businessmenand society about venture capital nancing possibilities,to promote the exchange o opinions and experience o the members o the association, to represent opinionsand interests o the members in negotiations with publicauthorities, to organize and to ensure cooperation withinternational or other countries’ venture capital associations.

MENA Private Equity AssociationTe MENA Private Equity Association is a non-protentity committed to supporting and developing theprivate equity and venture capital industry in the MiddleEast and North Arica.

Te Association aims to oster greater communication within the region’s private equity and venture capital

net¬work and acilitate knowledge sharing in order toencourage overall economic growth, and will actively promote the industry’s successes to local stakeholdersand build trust with investors, regulators and the publicregionally and internationally.



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NVCA(Norwegian Venture Capital & Private Equity Association)

NVCA is a non-prot association supporting the interestso the companies active in the Norwegian industry. NVCA was established in 2001 by the leading players, and representstoday around 40 Norway-based private equity and venturecapital rms, the vast majority o such rms in Norway. Te 20associated members are service providers to the industry such aslawyers, advisors, investors and corporate nance companies.

Te purpose o the association is to promote an efcient privateequity market, to improve the regulations o the industry,to promote entrepreneurship and to ensure political ocuson Norway’s position as a strong and attractive country orinternational investments. NVCA provides knowledge, analysisand general inormation to the Government and media tocommunicate the importance o the industry and it’s rolein the national innovation system and the general industrialdevelopment in Norway. NVCA is in this way the public aceo the industry providing services to its members, investors andentrepreneurs as well as the Government and media.

NVP(Nederlandse Vereniging vanParticipatiemaatschappijen)

Te Dutch Private Equity & Venture Capital Associationacts in the interests o private equity companies in theNetherlands. Te aims o the NVP are: in cooperation with the government, work on an adequate regulatory ramework or the private equity sector and its clients;inorm entrepreneurs and businesses about the nancing possibilities o private equity; inorm investors aboutthe characteristics o private equity as an asset class; raiseawareness and improve the image o private equity toachieve aorementioned goals; contribute to urther raising the level o proessionalism o the private equity sector.

Te NVP has about 70 members and 85 associated members.Members o the NVP represent 95% o the number o private

equity investments and about 85% o the total invested capitalin the Netherlands. More inormation about the activities o the NVP and its members can be ound on www.nvp.nl.

NZVCA(New Zealand Private Equity & VentureCapital Association Inc.)

Te NZVCA’s mission is to develop a world-best venturecapital and private equity environment or the benet o investors and entrepreneurs in New Zealand.

Our activities cover the whole spectrum o investmentin New Zealand private enterprise including Angel

investment, seed and early-stage venture capital throughto development capital and private equity (including management buy-outs and buy-ins).

PSIK

(Polish Private Equity and Venture CapitalAssociation)

PSIK represents private equity management rms operating in Poland. Its mission is to promote and develop theprivate equity and venture capital industry in Poland. PSIK comprises 87 institutions: 41 private equity managementrms (ull members) and 46 associate members that are law and consulting companies as well as banks cooperating withthe private equity and venture capital industry.

Te ull members have more than EUR 21 billion undermanagement and have invested in more than 700 Polish andCEE companies.

www.psik.org.pl.



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Réseau Capital(Quebec’s Private Equity and Venture Capital Association)Réseau Capital, Quebec’s Private Equity and VentureCapital Association, is the only private equity associationthat brings together all stakeholders involved in theQuebec investment chain.

MissionTe mission o Réseau Capital is to contribute to thedevelopment and efcient operation o the private equity industry, which plays a major role in the developmentand nancing o businesses in Québec. Founded in 1989,Réseau Capital has more than 425 members representing private equity, labour-sponsored and other retail unds andpublic investment companies as well as banks and insurancecompanies, accounting and law rms, along with many proessionals working in the eld.

Main objectivesRéseau Capital works to promote the private equity industry in Québec through activities in ve areas: training (provide

members with access to training to keep them currenton various issues they encounter and ways to deal withthem), information (identiy and eectively communicateinormation, particularly about the industry and variousissues, to meet members’ needs), networking (organizeevents or members to meet and network with other industry stakeholders, develop or enhance business relationships,and advance their knowledge in a riendly environment), promotion (promote understanding o the private equity ecosystem and inorm direct and indirect industry players, themedia, government authorities and the general public aboutthe industry’s achievements and economic contributions)and representation (ensure that the mutual interests o its

members are taken into account by the various regulatory andgovernmental bodies when establishing policies or regulationsand solve challenges in the private equity industry in themutual interest o various members).

Te ull members have more than EUR 21 billion undermanagement and have invested in more than 700 Polish andCEE companies.

RVCA(Russian Private Equity and Venture CapitalAssociation)

RVCA was set up in 1997. Te central ofce o RVCA issituated in St.Petersburg. oday RVCA unites about 60members more than hal o them are private equity andventure capital unds.

RVCA’s mission is to contribute to establishment anddevelopment o venture industry in Russia. RVCA’s goals are:to create a political and entrepreneurial environment avorableor investment activity in Russia, to represent RVCA’s interestsin political and administrative agencies, in mass media, innancial and industrial circles in Russia and abroad, to provideinormational support and create communicative orumsor Russian venture market players, to create the stratum o experts qualied to work in venture business companies.

RVCA is the unique proessional organization in Russia units the progressive nancial institutions investing in privateRussian companies. RVCA is generally accepted in thebusiness community and by the Russian Government.

SAVCA(South Arican Venture Capital and PrivateEquity Association)

SAVCA is a non-prot company based in South Arica thatrepresents the interests o the participants o the privateequity and venture capital industry in Southern Arica. Allthe key participants in the industry are members o the Association. Membership o SAVCA provides a high levelo endorsement and denotes a high level o proessionalismand integrity or the member rm. SAVCA plays a meaningul role in the Southern Arican private equity andventure capital industry by promoting the industry and itsmembers, promoting sel-regulation, setting proessionalstandards, lobbying, disseminating inormation on theindustry, arranging training or the sta o its members andresearching the industry in South Arica.

SAVCA represents over 70 private equity and venture capitalund managers, the industry has over R 100 billion (c.US$12.5 billion) in unds under management with approximately 400 proessionals.

www.savca.co.za



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SECA(Swiss Private Equity and Corporate FinanceAssociation)

SECA is the representative body or Switzerland’s privateequity, venture capital and corporate nance industries. SECA has the objective to promote private equity and corporatenance activities in Switzerland. Members o the SECA includeequity investment companies, Banks, Corporate Finance Advisors, Auditing Companies, Management Consultants andPrivate Investors.

Te association is a non-prot organization and has theollowing purposes: to promote corporate nance and privateequity activities in the public and the relevant target groups,to promote the exchange o ideas and the cooperationbetween members, to contribute to the proessionaleducation and development o the members and their clients,to represent the members views and interests in discussion with government and other bodies, to establish and maintainethical and proessional standards.

In addition to promoting corporate nance in the public,SECA provides a platorm to its members to exchangeinormation and experiences. Te main activities o

SECA are: seminars and events about relevant topics,publication o statistics about private equity investmentand management buyout activities in Switzerland, weekly edition o a SECA eNewsletter (or ree), contacts o otherassociations and state bodies.

SLOVCA(The Slovak Venture Capital Association)

SLOVCA was created in 1995 with primary purpose toincrease the awareness o private equity and venture capitalto the public, such as the entrepreneurs, investment andbanking institutions and the economic, political andregulatory bodies in Slovakia.

Te mission o SLOVCA includes ve key objectives: toprovide inormation to those seeking capital or new andexisting enterprises, to represent the interests o membersbeore the government and other related institutions/

agencies, to provide a orum or networking or membersto exchange views and practices, to provide education andtraining or members o SLOVCA and others, to encouragethe highest standards o business practices.

SVCA(Singapore Venture Capital & Private Equity Association)

Established in 1992, the Singapore Venture Capital & PrivateEquity Association (SVCA) is a not-or-prot organisationormed to oster the growth o venture capital (VC) andprivate equity (PE) in Singapore and around the region. Froma humble start o 2, our membership now exceeds 100 andcontinues to grow with the industry’s development.

Since its inception, SVCA has championed various eorts topromote the local VC/PE industry through talks, workshops,seminars, conerences and networking events. Te thrusts o SVCA continues to be (1) ostering a greater understanding o the importance o venture capital and private equity tothe Singapore economy in support o entrepreneurship andinnovation; (2) representing the local VC/PE industry in andoutside o Singapore; (3) nurturing an environment conduciveor advancing VC/PE investment and proession; and (4)providing a platorm to match und-seeking businesses withour members and the investment community.

For more inormation please visit: www.svca.org.sg.

SVCA(The Swedish Private Equity and VentureCapital Association)

Te SVCA represents around 110 private equity rms as wellas business angels and service providers. Sweden is one o theleading private equity markets with annual private equity investments over 1% o the national GDP. Te Association

was established 1985 and its objective is to work towardsa well-unctioning private equity industry in Sweden. Tisis done by supplying inormation and working or theproessional development o the industry.

We aim to inorm about how the industry unctions and whatrameworks are needed to acilitate entrepreneurs and investorsso that together they can help the development o the Swedisheconomy and industry that is necessary or the country’s utureprosperity. We also inorm about how investments in privateequity unds have yielded a good prot over the long term orpension unds and other institutional investors. We work orthe proessional development o players active in the industry through education, ethical guidelines, transparency and valuationprinciples, networking and seminars with the participation o international colleagues, amongst many other things.

See www.svca.se or more inormation.

130301 IPEV Valuation Guidelines Ed December 2012

Documents

Transcript of 130301 IPEV Valuation Guidelines Ed December 2012