Valuation

Research shows 63% of funds consider their valuation policy to be effective. On the other hand, only 25% of investors in private equity funds consider “valuation policies as effective at managing risk” (source: PwC)

In terms of documentation and certification, 59% of institutional investors believe that the quality of information on valuation techniques used by the private equity industry is average and only 22% consider it good or rather good (source: PwC)

Multiple bodies, such as the IPEV, establish recommendations to provide investors with valuation principles and methods for unlisted securities.

What can P. & Partners do for you:

• Assist in the definition of the valuation methods to be used
• Recommends key indicators to monitor the value creation of each investment
• Support to integrate new market standards (norms, guidelines, etc.)

Despite the existence of professionals, opacity and inefficiency can make it necessary to improve the valuation process.

P & Partners recommends the implementation of a methodology based on:

• The predominance of the “multi-criteria” approach: in-depth portfolio analysis, consistency of methods and flexibility in the search for “Fair Value”
• The precise and reasoned selection of valuation methods

P & Partners offers you:

• Access to new financial expertise in terms of “multi-criteria” valuations
• Diversify your use of certifications and integrate into your processes the audit of the information necessary to evaluate your investments

 Nature of services offered:

• Provide the tools and methodology to base your valuation calculations on “Fair Value” vs. mechanical application of a single or dual criteria process
• Prevent risks and detect upstream reasons for a change of methodology, taking into account the evolution of intrinsic investment characteristics

 Delivery and documentation of work: 

• An analysis report presenting portfolio valuation methodology
• Provide valuation models / assist in modelling market assumptions

We can support you at each step of your portfolio valuation to implement a defined methodology

At each calculation deadline:

• Identify and update key parameters of the valuation model
• Collect and assess financial aggregates / KPIs of valued companies
• Assess the exogenous data to be integrated into each valuation model (WACC, etc.)

Appreciate the results obtained:

• Adaptation of methods with a multi-criteria approach (intrinsic methods vs. analog methods)
• Restatement of financial aggregates (EBITDA, cash flows, etc.) from current trading, budget N, forecast N+1
• Professional judgment

Set up a 3rd level operational control delegated to an independent expert who reports to General Management, the Risk Management Department, the Head of Compliance and Internal Control, in the management companies.

4-level certification depending on the desired level of assurance:

Level 1

• Flash” diagnosis of existing valuation procedures
• Audit report including risk areas and risks of material error

Level 2

• Audit of valuation methods against a defined set of standards (e. g. internal evaluation procedure)
• Compliance report

Level 3

• Audit of valuation procedures in relation to market practices (e.g. IPEV guidelines)
• Compliance report

Level 4

• Certification of the Fair Value of a participation / portfolio of unlisted companies
• Certificate on the Enterprise Value of the companies subject to the work of P. & Partners