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| PitchBook Newsletter | | Private Equity Edition |
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Surviving scrutiny: The importance of the valuation process for PE and hedge fund managers PitchBook Dealmakers Column
As the demand for transparency rises for private equity and hedge funds, the spotlight has been turned toward valuation practices. There are a number of reasons why the valuation process has become important, and they are essential for any fund manager to understand.
“With the increased attention, a key consideration for asset managers is the probability of an SEC audit,” notes John Czapla, managing director and Portfolio Valuation Securities Group practice leader with Valuation Research Corporation. “A failure to comply may have a negative impact on the asset manager’s reputation.” An important component of the SEC review is valuation. Asset managers—private equity firms, hedge funds, business development companies—need to prepare accurate valuations of their investment holdings with proper valuation policies and procedures in place in order to withstand an SEC inquiry.
The attention around valuation isn’t solely stemming from enhanced SEC regulation. In the post-Bernie Madoff era, limited partners, boards of directors and auditors are also demanding enhanced governance and more transparent documentation when it comes to valuations, especially those of illiquid investments. In addition to the heightened caution caused by fraudulent structures, another key catalyst to enhanced governance and transparency is the record flow of capital into alternative investments.
To avoid unnecessary investor, auditor, or regulatory scrutiny around valuations, hedge funds and PE funds should follow several best practices to improve processes, increase transparency, and create accountability for valuation oversight.
Read the full VRC white paper, “Best Practices for Private Equity Sponsors in an Age of Increasing Scrutiny”: click here.
This article represents the views of the author only and does not necessarily represent the views of PitchBook. |
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Uncertainty abounds after U.K. elects Brexit The U.K. has voted to leave the EU. In the coming weeks, leaders worldwide will begin the process of integrating the fifth largest economy into a world order it voted to disrupt. As the central banks of England and Europe debate fiscal policy and as markets challenge the best of contingency plans, what happens next?
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Weekly PE Recap Recommended Reads PricewaterhouseCoopers has released its mid-year deal outlook report, with plenty of info on the slow start to activity in 2016 and the odds of the market grinding to a halt in 2H. [PwC]
Some background info on Evergreen Coast Capital, the new private equity affiliate of Paul Singer’s Elliott Management, which closed its debut deal earlier this week to acquire Dell’s software unit alongside Francisco Partners. [Bloomberg]
Instead of betting legally on companies in the public markets, some sharks choose to gamble illegally on sports. A look at industry leader R.J. Bell and whether his army of touts actually provide customers with any edge at all. [Deadspin]
Firms like The Carlyle Group, KKR and Partners Group have been introducing new, more-liquid vehicles for accredited individuals. A deeper dive on these so-called interval funds. [InvestmentNews] |
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The Daily Benchmark
2009 Vintage U.S. Buyout Funds with IT Investments
Completed PE Deals
Thoma Bravo secures Bomgar in SBO
Snow Phipps acquires ECRM from BV
Blackstone buys into Marathon
I Squared Capital-backed Amplus adds rooftop projects
Europe
Cerberus offers to acquire GE Money Bank
Equistone buys coating specialist
Management News
Knauf joins KPCB after decade with Warburg Pincus
SK Capital unveils promotions
2009 Vintage U.S. Buyout Funds with IT Investments Thoma Bravo secures Bomgar in SBO | Thoma Bravo has completed the purchase of Bomgar from TA Associates, which had backed the company since 2014. Bomgar is a secure access business providing remote support, privileged access management and identity management to customers spanning 80 countries. | |
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Snow Phipps acquires ECRM from BV | ECRM provides services, software and data to consumer-product manufacturers and retailers. BV Investment Partners acquired the company in 2013. | |
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Blackstone buys into Marathon | Via its Blackstone Alternative Asset Management arm, Blackstone has acquired a passive, minority stake in Marathon Asset Management. Marathon is a global credit manager with about $12.75 billion in AUM. | |
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I Squared Capital-backed Amplus adds rooftop projects Cerberus offers to acquire GE Money Bank | Cerberus Capital Management has submitted a binding offer to purchase GE Money Bank, GE's (NYSE: GE) French consumer finance business. The transaction would represent an ending net investment of about $4.6 billion as of the end of 1Q. | |
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Equistone buys coating specialist | Equistone Partners Europe has purchased a majority stake in Sihl Group from Italy-based Diatec. The company is a manufacturer of coated papers, films and fabrics serving a wide range of sectors including architecture, industrials, publishing, photography and logistics. | |
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Knauf joins KPCB after decade with Warburg Pincus SK Capital unveils promotions |
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