In November 2015, Invest Europe launched the latest edition of its Professional Standards Handbook. The publication aims to be a ‘one-stop shop’ of professional standards applicable to our industry. With a view to bringing together the fundamentals of governance, transparency and accountability, it has been a collaboration between LP and GP members of Invest Europe, as well as their advisers. The Handbook includes the Invest Europe Investor Reporting Guidelines, which updated to take account of the changing landscape following the implementation of the AIFMD across the EU since 2013. The Guidelines are designed to provide best practice investor reporting across an annual cycle.
The International Private Equity and Venture Capital Valuation (IPEV) Guidelines puts forward recommendations, intended to correspond to current best practice, on the valuation of private equity and venture capital investments.
The IPEV Board published the updated version of the IPEV Valuation Guidelines in December 2015. The new guidelines, the first revision since 2012, come following three years of experience applying IFRS 13, and with continued experience applying ASC Topic 820. The 2015 edition aims to improve readability with edits that clarify commentary and formatting changes to signpost content. Secondly, a number of technical clarifications have also been incorporated.
The Private Equity Reporting Group was created in 2007 as an independent body to monitor the private equity industry’s compliance with Sir David Walker’s Guidelines for Disclosure and Transparency in Private Equity. This was in response to the increased scrutiny and negative publicity the private equity industry faced in 2007 from the media, trade unions and politicians, culminating in the Treasury Select Committee hearings.
Since then, the industry has embraced and adopted these Guidelines with over seventy portfolio companies currently providing additional disclosure voluntarily. Further detail and reports can be found on the Group’s website and below we set out the objectives and benefits of the Guidelines to the private equity industry.
For the purposes of the Guidelines, a portfolio company will be in scope of the Guidelines if it is a UK company that has been acquired by one or more private equity firms (as defined below) and meets both part a and b of the following tests:
Acquisition in a public to private transaction where the market capitalisation together with the premium for acquisition of control was in excess of £210 million
Acquisition in a secondary or other non-market transaction where enterprise value at the time of the transaction was in excess of £350 million
More than 50% of revenues were generated in the UK
UK employees totalled in excess of 1,000 full-time equivalents.
Private equity firm
Private equity firms for the purposes of the Guidelines include private equity and ‘private equity-like’ firms. Private equity firms include those that manage or advise funds that either own or control one or more portfolio companies for the purpose of the Guidelines (as defined above). Private equity firms include those that acquire portfolio companies: i) with funds provided by one or more investors; ii) an exit/disposal of the company is envisaged and iii) may play an active management role in the company. This would therefore include, but is not limited to, other types of investment funds including infrastructure funds, pension funds, sovereign wealth funds and credit/debt funds. It also applies to firms that may be headquartered outside of the UK. Banks and credit institutions, other than their asset management operations, are specifically excluded.
Further details can be found on the Private Equity Reporting Group website.
FOR FURTHER INFORMATION PLEASE CONTACT THE BVCA
+44 (0)20 7492 0400