With David Scopelliti’s move from Connecticut, he is giving up his vice chairmanship at the Institutional Limited Partners Association (ILPA), the non-profit industry group designed to promote research and standards in the private equity industry.
During Scopelliti’s tenure, there were more than a few triumphs for the industry group. The most notable, though, is the traction made by the market in establishing an industry-wide set of reporting and performance measurement guidelines.
The British Venture Capital Association got the ball rolling back in 1993, when it penned the first proposal for a boiler-plate valuations model—designed to make private equity reporting analogous from one firm to the next. The movement has since progressed in a series of fits and starts, with new industry groups over the years providing their own separate set of guidelines, creating more confusion than actual progress.
The debate has often centered around whether firms use “fair-value” reporting metrics for their portfolio holdings, or simply value their investments at cost (guideline proponents prefer the former).
“Valuing a private company is more of an art than a science, but the goal for the GP should be to provide enough data points that would allow the LPs to be able to triangulate a company’s valuation,” Scopelliti says.
While the movement is now 13 years in the making, it is finally starting to pay dividends. The varying models have since been whittled down to just two, each one sponsored by the BVCA and the Private Equity Industry Guidelines Group (PEIGG). ILPA, for its part, has backed the PEIGG set of guidelines.
And with more clarity has come acquiescence. According to Scopelliti, “You can see it in the year-end financial statements and at advisory board meetings. Accountants are beginning to implement fair value more and more.”—K.M.