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Guidelines go global

A new set of private equity valuation guidelines have been endorsed in the farthest corners of the world - but not in the US. By Judy Kuan.

In the time since their launch, the promulgation of the International Private Equity and Venture Capital (IPEV) Valuation Guidelines has steadily caught on – first in Europe, and increasingly around the globe.

Originally developed by France’s l’Association Française des Investisseurs en Capital, the British Venture Capital Association and the European Private Equity and Venture Capital Association, the IPEV guidelines had been endorsed by 30 regional and national private equity associations as of May 10, 2006.

The IPEV guidelines, launched in March 2005, aim to create consistency in the way private equity investments are valued and are based on “the overall principle of ‘fair value’ in order to be consistent with IFRS and US GAAP,” according to the organization’s website.

Similarly, the valuation guidelines issued by the Private Equity Industry Guidelines Group (PEIGG) – which is meant to adhere to US GAAP accounting standards – have also gained momentum since their issuance at the end of 2003.
 
One of the most recent groups to join the push for fair value is the Emerging Markets Private Equity Association (EMPEA), whose board of directors voted on May 10 in favor of endorsing both the IPEV and PEIGG guidelines. Those that have officially endorsed the IPEV standards include the private equity associations of Germany, Tunisia, Hong Kong, and Quebec (see list below).

Still absent – and conspicuously so – from the list is the National Venture Capital Association (NVCA), which acts as an advocacy and trade group for the venture capital industry in the United States. While the NVCA has recommended that its members include a review of the PEIGG standards when evaluating their approach to valuation methods, the association has not offered a formal endorsement of either the PEIGG nor IPEV standards to date.

While it is not yet apparent if and when NVCA will offer its endorsement to these valuation guidelines, there are clear indications that the momentum for signing off on the guidelines continues to build across many parts of the world.

Associations to have endorsed valuation guidelines:

AIFI – Italian Private Equity and Venture Capital Association
APCRI – Portuguese Private Equity and Venture Capital Association
APEA – Arab Private Equity Association
ASCRI – Spanish Private Equity and Venture Capital Association
ATIC – Tunisian Venture Capital Association
AVCA – African Venture Capital Association
AVCAL – Australian Venture Capital Association
AVCO – Austrian Private Equity and Venture Capital Organization
BVA – Belgian Venturing Association
BVK – German Private Equity and Venture Capital Association e.V.
CVCA – Canada’s Venture Capital and Private Equity Association
CVCA – Czech Venture Capital and Private Equity Association
DVCA – Danish Venture Capital Association
EMPEA – Emerging Markets Private Equity Association
FVCA – Finnish Venture Capital Association
HKVCA – Hong Kong Venture Capital Association
HVCA – Hungarian Venture Capital and Private Equity Association
ILPA – Institutional Limited Partners Association
IVCA – Irish Venture Capital Association
LAVCA – Latin American Venture Capital Association
LVCA – Latvian Venture Capital Association
NVCA – Norwegian Venture Capital & Private Equity Association
NVP – Nederlandse Vereniging van Participatiemaatschappijen
PPEA – Polish Private Equity Association
Réseau Capital – Québec Venture Capital and Private Equity Association
RVCA – Russian Private Equity and Venture Capital Association
SAVCA – Southern African Venture Capital and Private Equity Association
SECA – Swiss Private Equity and Corporate Finance Association
SLOVCA – Slovak Venture Capital Association
SVCA – Swedish Private Equity and Venture Capital Association