Portfolio Valuation for Investment Management Companies

Statement of Financial Accounting Standards (ASC 820) has changed the way firms and investment partnerships must report the fair value of investments. Because of the complexity and variety of investments for which there is no active market, private equity firms, hedge funds, endowments and other investors often require independent valuations of investments.

In addition, banks and other lending institutions frequently receive equity interests (often in the form of warrants) in connection with their leveraged finance activities. These interests must be valued periodically to satisfy banking regulations. Bank trust departments also hold interests in private companies that must be valued periodically to meet regulatory requirements.

The Wharton team has expertise in valuing a variety of investments including:

Common equity
Preferred equity – participating and non-participating
Warrants and other options
Debt – secured and unsecured
Convertible debt and convertible preferred shares
Highly leveraged equity, where the equity resembles an option on the value of the firm’s assets
Investments that are a part of a complex capital structure

Wharton’s professionals will help you value your investment in accordance with industry best practices. This involves following an appropriate valuation approach and selecting projections and assumptions based on careful analysis and market data from leading data providers. We report on the investment’s value and document the methodology and assumptions in a manner that can stand up to the increased level of scrutiny being placed on audited financial reports. We can even assist in developing a valuation policy that will provide a consistent and transparent accounting of investment value over time.