Tackling Tougher Valuation Standards for Private Equity Funds

In December 2019, The Wall Street Journal published an article outlining tougher valuation standards for Private Equity funds. The article titled, Tougher Valuation Standards Raise the Bar for Managers and Investors, discusses the following:

  • The SEC views valuation as the responsibility of the fund;
  • Heightened scrutiny has prompted more funds to hire third-party valuation providers;
  • Recent study reports that 30% of firms outsource part or all of their valuation processes, an increase from the 5% of firms reported two years ago;
  • Regulators now regularly question firm's valuation methods during exams, looking for inconsistencies in how values are assigned;
  • Recent growth in providing more sophisticated valuations are due to:
    • New set of private equity accounting guidelines and;
    • Rapid growth of the private equity secondary market;
  • Hiring an outside valuation adviser for a fairness opinion has become a standard for many GP-led secondary transactions.

Houlihan Capital is here to assist should you have any valuation issues or fairness opinion needs. As an independent valuation firm, we pride ourselves in providing senior level, superior quality client service, while being competitively priced at the same time. Our levels of valuation services range from a full bottoms-up valuation to providing a positive assurance review to your internal valuation. We can also assist with reviewing or drafting your valuation policy.

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