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  "mainEntity": [
    {
      "@type": "Question",
      "name": "How often should a private equity fund value its portfolio?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "Most private equity funds value their portfolios quarterly, with a more detailed assessment at the financial year end. Quarterly valuations support LP reporting and NAV calculations, while the annual valuation carries the fuller documentation needed to withstand audit. Interim valuations may also be required around fundraising, secondaries, or material portfolio events."
      }
    },
    {
      "@type": "Question",
      "name": "What valuation methods are used for private equity portfolio companies?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "Private equity portfolio companies are most commonly valued using a market multiple approach, a discounted cash flow analysis, or recent transaction evidence, often in combination. The IPEV guidelines treat market multiples and DCF as the primary techniques for established businesses, with the appropriate method depending on the company's maturity, the reliability of its forecasts, and the availability of comparable data. The judgement lies in weighting these methods consistently across reporting periods."
      }
    },
    {
      "@type": "Question",
      "name": "What are the IPEV guidelines and why do they matter?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "The IPEV guidelines are the International Private Equity and Venture Capital Valuation Guidelines, the recognised framework for valuing private equity and venture investments at fair value. They matter because auditors, LPs, and regulators expect funds to follow them, and adherence is what makes a valuation defensible under scrutiny. They set out how to apply fair value principles consistently rather than prescribing a single formula."
      }
    },
    {
      "@type": "Question",
      "name": "How are early-stage or pre-revenue companies valued?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "Early-stage and pre-revenue companies are usually valued by reference to the price of recent investment rounds, adjusted for any change in circumstances since the round closed. Where a company's prospects have shifted materially, a milestone analysis or scenario-based approach may be more appropriate than holding at the last round price. The common error is treating the most recent funding round as fair value indefinitely, when IPEV requires it to be reassessed at each reporting date."
      }
    },
    {
      "@type": "Question",
      "name": "How are private credit investments valued?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "Private credit investments are valued at fair value, typically using a discounted cash flow approach that reflects the loan's contractual cash flows, the borrower's credit risk, and current market yields for comparable debt. For performing loans the result often sits close to par, but it should never be assumed to equal par without analysis. Deterioration in the borrower's position or a widening of market spreads can move fair value below face value well before any default."
      }
    },
    {
      "@type": "Question",
      "name": "Why is a private credit loan rarely worth its face value?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "A private credit loan is rarely worth exactly its face value because fair value reflects current market conditions and borrower credit risk, not the amount originally lent. If market yields have risen since origination, or the borrower's credit has weakened, the loan's fair value falls below par even while it continues to perform. Holding every performing loan at par is one of the most common weaknesses auditors challenge in private credit portfolios."
      }
    },
    {
      "@type": "Question",
      "name": "How do you value a non-performing loan?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "A non-performing loan is valued by estimating the recoverable amount, usually through a recovery analysis that weighs the value of any collateral against the costs and time expected to realise it. Where recovery depends on uncertain outcomes, a probability-weighted scenario approach gives a more defensible result than a single point estimate. The key judgements are the recovery timeline and the discount rate applied to reflect the heightened risk."
      }
    },
    {
      "@type": "Question",
      "name": "How do interest rate movements affect private credit valuations?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "Interest rate movements affect private credit valuations primarily through the discount rate used to value future cash flows. When market rates rise, the fair value of an existing fixed-rate loan falls, because its cash flows are discounted more heavily; floating-rate loans are more insulated but not immune, as wider credit spreads can still reduce value. The effect is most pronounced on longer-dated and fixed-rate exposures."
      }
    },
    {
      "@type": "Question",
      "name": "What is expected credit loss modelling and when does it apply?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "Expected credit loss modelling is the IFRS 9 framework for estimating the credit losses a lender expects over the life of a loan, incorporating the probability of default, the loss given default, and the exposure at default. It applies to funds reporting under IFRS that hold debt instruments, and it sits alongside the fair value assessment rather than replacing it. The forward-looking, scenario-weighted nature of ECL is where most of the judgement and audit attention falls."
      }
    },
    {
      "@type": "Question",
      "name": "Can EMI share scheme valuations be agreed with HMRC in advance?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "Yes, EMI valuations can be agreed in advance with HMRC's Shares and Assets Valuation team, which gives companies certainty on the unrestricted and actual market values used for option grants before they are made. The agreed valuation is normally valid for 90 days, within which options should be granted. This advance agreement is one of the main practical advantages of the EMI scheme."
      }
    },
    {
      "@type": "Question",
      "name": "What is a growth share valuation and why is it different?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "A growth share valuation establishes the value of shares that participate only in the growth of a company above a set hurdle, rather than in its existing value. It differs from an ordinary share valuation because the hurdle is deliberately set at or above current value, so the growth shares carry little value at the point of issue. Unlike EMI valuations, there is no HMRC advance clearance route for growth shares, so the valuation must be documented robustly enough to stand up to later enquiry."
      }
    },
    {
      "@type": "Question",
      "name": "How is the hurdle on a growth share set?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "The hurdle on a growth share is set at or modestly above the current market value of the company's ordinary shares, so that the growth shares deliver value only on future appreciation. Setting the hurdle too low risks an immediate taxable benefit for the recipient, while setting it too high erodes the incentive, so the level depends on a defensible valuation of the company at the date of issue. This is why a sound underlying valuation matters as much as the structure itself."
      }
    },
    {
      "@type": "Question",
      "name": "Why do companies need a valuation for share-based payments?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "Companies need a share-based payment valuation to measure the accounting charge for equity awards under IFRS 2 or FRS 102 Section 26, which require the fair value of the award to be recognised over the vesting period. The valuation feeds directly into the profit and loss account and is routinely examined by auditors. Awards over unlisted shares, or those with performance conditions, need a model that reflects those features rather than a simple share price."
      }
    },
    {
      "@type": "Question",
      "name": "What is the difference between a portfolio valuation and a transaction valuation?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "A portfolio valuation estimates the fair value of an investment for reporting purposes, while a transaction valuation supports a specific decision such as a purchase, sale, or dispute. The two can reach different figures legitimately, because a transaction valuation may reflect synergies, negotiating position, or a specific buyer's perspective that fair value deliberately excludes. Understanding which standard of value applies is the first step in any transaction engagement."
      }
    },
    {
      "@type": "Question",
      "name": "What valuation support is needed during an M&A transaction?",
      "acceptedAnswer": {
        "@type": "Answer",
        "text": "During an M&A transaction, valuation support typically covers the pricing of the target, the design of the purchase price mechanism, and assistance with completion accounts or earn-out calculations after closing. Independent valuation opinions may also be needed to support warranty and indemnity insurance or to resolve disputes between parties. The aim is a valuation that is both commercially realistic and documented well enough to withstand challenge from the other side."
      }
    }
  ]
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