BVCA looks at valuation guidelines

Private equity valuation guidelines are being reviewed by the British Venture Capital Association (BVCA), which has set up a working party to produce guidelines with an international acceptance by the middle of next year.

It is hoped the new guidelines will encourage more regular reporting, greater openness of information, comparability and consistency in valuation techniques. Michael Queen, vice chairman of the BVCA and chairman of the BVCA’s Investor Relations Committee, will chair the working party. It will focus on valuation and reporting guidelines and will consult widely across Europe with member firms, investors, the EVCA and the accounting profession.

BVCA chief executive, John Mackie, and executive director, Jennifer English, will also sit on the board. “A set of international valuation guidelines will be a huge step forward for the industry,” said John Mackie.

As the private equity industry continues to evolve, there is a need for greater consistency of guidelines from both managers and investors. The EVCA’s former guidelines were put together in 1993 and earlier this year the association decided it was necessary to update the guidelines, particularly since distinctions between categories such as venture and development investments have become blurred.