Under Pressure: Valuations

Last week, Jaime Hildreth, Managing Director, Head of PE and LP Market Strategy, attended the Markets Group 5th Annual Private Equity Americas Forum. While there, she participated in a panel that focused on sharing “Best Practices for Efficient Investment Due Diligence and Operational Assessments.”

Upon her return from the conference, she recapped her takeaways for Ipreo PCM.

Excerpt:

As allocations to the private capital markets continue to grow, so too does the level of scrutiny investors place on their due diligence process. Significant due diligence is often performed by investors when evaluating a private equity fund opportunity. In more recent years, operational due diligence scrutiny has focused on understanding the firm’s valuation process and policies.

The valuation process includes not only the people and system capabilities but also corporate governance and the team’s independence within the organization. Valuing illiquid assets and providing transparent reporting has never been more critical in the minds of investors.

So, what are investors looking for as part of the operational due diligence process, and what are the red flags? Let’s start with my hypothesis.  I believe there are five key areas to focus on as part of a firm’s standard operational due diligence practice when it comes to addressing valuations.

Visit Ipreo PCM’s Thought Leadership page to see Jaime’s five key areas and for further resources around operational due diligence.