Fair value challenges in the current environment for private equity companies

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Fair value is one of the hottest topics facing the alternative investments sector today and particularly private equity. The ever-increasing investor, regulatory and accounting pressure for companies to focus more attention on valuation has coincided with the credit crunch and the most difficult economic conditions in years.

The latest PwC publication on fair value challenges in the current environment covers the following:

• The increasing demand for transparency over fair value reporting
• The difficulties in valuing investments due to a lack of transactions and volatile markets
• The expectation of large write-downs in the value of investments given the significant declines across global markets
• The additional guidance which was recently issued by the IASB and FASB on values in inactive markets and fair value accounting in accordance with IFRS and US GAAP
• The benefits of a rigorous valuation process
• The need for significant judgment to be applied in arriving at fair value

The article also contains best practice tips for valuation practitioners.