Valuation Guidelines for Private Equity and Venture Capital Funds

Abstract

In March 2005, the most recent set of valuation guidelines produced by the Association Francaise des Investisseurs en Capital (AFIC), the British Venture Capital Association (BVCA) and the European Private Equity and Venture Capital Association (EVCA) were published following previous sets in 1991, 1993, 2001, and 2003. These new International Private Equity and Venture Capital Valuation (IPEV) guidelines were the result of increasing importance and acceptance of this asset class during the last decade, combined with the internationalization of the industry, the clear increase in the quality and availability of information, new applicable laws, regulations, and accounting standards. The IPEV guidelines took effect for all reporting periods after January 1, 2005. The European Investment Fund (EIF) asked the funds in its portfolio to produce their June 2005 reports in compliance with the IPEV guidelines. Using the 200+ funds in its portfolio, the EIF conducted a survey on the consequent adoption and accurate application of the IPEV guidelines. In this article, the results of that survey are presented.