The International Private Equity and Venture Capital Valuation Guidelines (IPEV Valuation Guidelines) have been updated to remove the valuation methodology that previously permitted investors to mark the value of an investment to a recent pricing point.
This was in practice and often adopted by investors to mark a recent acquisition to the cost price for a number of periods post-acquisition. The change in the IPEV Valuation Guidelines has been implemented to emphasize that fair value must be adopted at every reference date and a default to historical cost is not acceptable.
This will be an important factor for firms and investors that use the IPEV Valuation Guidelines to consider in the latest Q4 / annual reporting which is likely to be on most PE and VC firms’ radars at the moment.
Citing accounting inconsistency, IPEV removes pricing calculation for fair value.