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Investment Valuations: Best Practices at Southard Financial


We’re committed to upholding the industry’s highest standards.

Around the world, companies that provide valuations of private equity and venture capital investments follow the best practices spelled out in the International Private Equity and Venture Capital Valuation (IPEV) Guidelines. The IPEV Board, an independent body created in 2005, works to maintain, promote, monitor, and update the guidelines as needed; the most recent update was the December 2015 edition.

The basics: Underlying concepts you need to know.

Fair Value is defined as “the price that would be received to sell an asset in an Orderly Transaction between Market Participants at the Measurement Date”.

Valuation Principles are the recommended best practices that should be followed when determining Fair Value:

  1. Fair Value should be assessed on appropriate measurement dates throughout ownership of the investment.
  2. Techniques used to determine value should be suitable to the nature and type of investment, using up-to-date market data and appropriate assumptions.
  3. Value should be assessed in light of market conditions at the time of measurement.
  4. Generally, the price for individual financial instruments should be based on the value of the underlying stock/company.
  5. Valuation should be conducted with care and judgment but not excessive caution.
  6. For investments priced at fair value when first purchased, original market inputs should be used to calibrate values for future measurement dates.
  7. Exit prices should be backtested against previous fair value assessments to confirm the legitimacy of any substantive differences.

The benefits: How our commitment to IPEV Guidelines helps you.

Southard Financial follows IPEV Guidelines because we want to ensure that our valuation process is robust, consistent, and transparent.

A robust process follows the highest standards and uses hard data in determining fair value, resulting in valuations are that accurate and defensible. The robustness of a process is directly tied to the choice of valuation techniques used and to the judgment and expertise of those conducting the process.

A consistent process ensures that all valuations are conducted following a reliable process that can be tracked and which does not vary when multiple people are involved. Consistency also helps to streamline processes, improving efficiency, communication, and collaboration across an enterprise.

A transparent process is one that provides thorough documentation and explanation of the valuation methodology and any variations. Transparency is directly related to both the robustness and consistency of a process — and is of paramount importance to buyers, sellers, and regulators.

Southard Financial stands ready to help.

We understand that reliable valuations is crucial to your investment strategy — and we’re here to help. You can trust in our experience and expertise, and our commitment to upholding the highest standards.

Get in touch, today.

 For valuation of private equity and venture capital investments, call Southard Financial at (901) 761-7500, use the form on our contact page, or reach out to us on social media.

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Explore this topic further:

IPEV Guidelines website

“International Private Equity and Venture Capital Valuation Guidelines – Edition December 2015” (PDF download)

“Valuation Best Practices for Private Equity Firms”

“Transparency and Disclosure: Valuation Best Practices in Private Equity”

“Independent Third-Party Valuation Insights: Portfolio Valuation Best Practices” (PDF download)

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