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SEC Proposes Disclosure Requirements for Hedge Funds and Private Equity Funds
Posted by Ryan Kuhn on Mar 18, 2022 2:49:27 PM

The SEC has recently proposed new disclosure requirements for hedge funds and private equity funds which have the potential to impact the extent and timeliness of reporting for these types of investment vehicles. 

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Topics: Private equity, Private Equity & Venture Capital, PE/VC, portfolio companies investment, SEC, hedge funds, Financial Stability Oversight Council

The Challenge with EBITDA in Valuations
Posted by Brendan Donovan on Apr 11, 2019 1:24:14 PM

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) is a common metric used by private equity fund managers to value investments made in portfolio companies. The advantage of EBITDA compared to net income is that the metric allows investment decisions and evaluations to be made while excluding the effects of financing and certain significant accounting decisions. Some also use it as an approximation of operating cash flows. The challenge with EBITDA is that the effect of upcoming accounting standards may make comparisons to prior periods difficult and could cause valuation and performance metrics to move in an unexpected manner. Three of the largest impacts may be in changes to the accounting for revenue recognition, leases, and cloud computing arrangements.

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Topics: investments, Private Equity & Venture Capital, PE/VC, portfolio companies, portfolio companies investment, fund managers, EBITDA

Making Your Fair Value Disclosures More Useful
Posted by Brendan Donovan on Oct 22, 2018 11:27:53 AM

Investment fund managers should be aware of upcoming changes to the fair value measurement framework that will simplify the current fair value disclosure requirements. The FASB recently issued Accounting Standards Update (ASU) 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement (ASU 2018-13), which is designed to make fair value disclosures align with the recently issued concept statement for notes to the financial statements. The applicability of the revisions contained in ASU 2018-13 differ for public and nonpublic entities.

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Topics: investments, Private Equity & Venture Capital, PE/VC, portfolio companies, Valuation, portfolio companies investment, fund managers

Summary of Draft AICPA Valuation Guide for Venture Capital and Private Equity Funds
Posted by Brendan Donovan on Oct 16, 2018 11:07:19 AM

Last May, the American Institute of Public Accountants (AICPA) issued a working draft of a guide to help venture capital, private equity and other investment companies better value their assets. The Valuation Guide (“the Guide”), titled Valuation of Portfolio Company Investments of Venture Capital and Private Equity Funds and Other Investment Companies addresses some of the concerns that have emerged over the years relating to divergent practices in estimating the fair value of portfolio company investments. It emphasizes specific techniques and provides industry-specific examples. Even though it is non-authoritative, the Guide reflects the best practices of applying U.S. Generally Accepted Accounting Principles (GAAP). In addition to considering the key provisions highlighted in this article, we encourage you to review the 15 real-life case studies included in the Guide as you begin your year-end valuation assessment.

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Topics: investments, Private Equity & Venture Capital, PE/VC, portfolio companies, portfolio companies investment

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