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Valuation Guidelines: The European Initiative LP Summit - May 18, 2005 Paris . Monique Saulnier Managing Partner & CFO. I. Worldwide Environment. Multiple initiatives/4 past years EVCA - March 2001 (Europe) AFIC - Oct. 2002 (France) BVCA - July 2003 (UK)

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Valuation guidelines the european initiative lp summit may 18 2005 paris

Valuation Guidelines:The European Initiative LP Summit - May 18, 2005 Paris

Monique Saulnier

Managing Partner & CFO


I worldwide environment
I. Worldwide Environment

  • Multiple initiatives/4 past years

  • EVCA - March 2001 (Europe)

  • AFIC - Oct. 2002 (France)

  • BVCA - July 2003 (UK)

  • AIMR (GIPS) - Nov. 2003 (US / worldwide)

  • AVCAL – Dec. 2003 (Australia)

  • PEIGG –Dec. 2003 (US)

  • AICPA – Dec. 2003 (US)

  • AFIC-BVCA-EVCA – Jan. 2005 (Europe)


Ii an afic bvca evca joint initiative

Conform to international accounting standards (implementation of the Fair Value Concept)

Willingness in Europe to come up with only one set of guidelines

Consultation document released in Jan. 2005

Final document released on March 16, 2005

II. An AFIC, BVCA, EVCA Joint Initiative


Iii comparison with march 2001 evca guidelines

Prescriptive vs principle driven (implementation of the Fair Value Concept)

No reporting Guidelines

Does not address corporate governance issues

III. Comparison with March 2001 EVCA Guidelines


Iii comparison with march 2001 evca guidelines unquoted investments consistency with fair value

Conservative Value no longer recommended (implementation of the Fair Value Concept)

Conservative value + fair market value no longer recommended

III. Comparison with March 2001 EVCA Guidelines – Unquoted investments (consistency with Fair Value)


Iii comparison with march 2001 evca guidelines unquoted investments consistency with fair value1

VC: write-ups possible on the basis of positive events (use of extreme caution)

Discount bands of 5% possible instead of 25%.

New methodologies recommended

III. Comparison with March 2001 EVCA Guidelines – Unquoted investments(consistency with Fair Value)


Iii comparison with march 2001 evca guidelines unquoted investments valuation methodologies
III. of extreme caution)Comparison with March 2001 EVCA Guidelines – Unquoted investmentsValuation Methodologies

  • Price of Recent Transaction

  • Earnings Multiple

  • Net assets

  • DCF (of underlying business)

  • DCF (from the investment)

  • Industry valuation Benchmarks

  • The Valuer should exercice their judgment to select the most appropriate methodology for a particular investment.


  • Iii comparison with march 2001 evca guidelines quoted investments

    IFRS/Gapp compliance => Last bid price on an active market and no marketability discount

    Outside of accounting principles compliance => bid or mid-market price and marketability discount

    III. Comparison with March 2001 EVCA Guidelines – Quoted investments


    Iv next steps
    IV. Next steps….. and no marketability discount

    • Other European and non European PE associations invited to join

    • Endorsement by other associations

    • Independent board to:

    • • Monitor IFRS & US Gaap

    • • Answer questions from members

    • • Recommend evolution of guidelines


    • To download and no marketability discount

    • the AFIC, BVCA, EVCA Valuation Guidelines:

    • In English

    • www.privateequityvaluation.com

    • In French

    • www.afic.asso.fr


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