Business Development Company (BDC)
BDCs are increasingly mandating the use of valuation firms to obtain independent valuations for the more complex or hard-to-value securities in their portfolios. As new BDCs form and existing BDCs grow, VRC receives many inquiries from both boards of directors and partners about the portfolio valuation process. At each valuation, VRC meets with BDC analysts to understand deal terms and the investments. We conduct proprietary research on comparables as well as the general pulse on the state of the equity and credit markets. We are sensitive to the criticality of meeting client reporting deadlines, financial reporting deadlines, scheduled board meetings as well as audit reviews, all of which dictate our own valuation process timelines to ensure we consistently deliver.
VRC’s portfolio valuation practice group performs more than 2,000 valuations each year and remains versatile in our industry-related acumen as a result of the securities we have valued for multiple different industries. It is important that we understand what drives value, as well as which multiples and metrics should be used when valuing distinctly different companies. Our portfolio valuation professionals offer deep experience and take the time to conduct a deep dive into our client’s investment details. More importantly, we understand the real reason for the valuation.
We are well-poised to present our valuation analyses to BDC investors and board of directors, which makes an unbiased determination of current fair value extremely important. The fact is, when it comes to delivering valuations for BDCs, our reputation for independence and ethics has kept us in business since 1975. Our name and long-term reputation are too critical to risk by rendering biased opinions.
As the demand for transparency rises for hedge funds, the spotlight also turns toward valuation practices, which has become essential for hedge fund managers. The attention does not only stem from enhanced SEC regulation; limited partners (LPs), boards of directors and auditors also demand enhanced governance and more transparent documentation when it comes to valuations, particularly those of illiquid investments. VRC understands the pressures hedge funds face:
- LPs, many of which are institutional investors such as insurance companies, endowments and large corporate pension plans place pressure on the general partners for increased transparency.
- Investors have demanded more transparency in valuation estimates and want more information on methodologies, key market inputs and valuation models.
- Fund board of directors are much more involved in the fund valuation processes as they are held responsible and accountable for the final sign-off of the asset manager’s valuations.
- Auditors, who are under a higher level of scrutiny since the creation of the PCAOB, require detailed support of figures used in financial statements, including valuation estimates for a fund’s assets, as reported under U.S. GAAP and ASC 820.
When it comes to a valuation partner, VRC knows that independence and consistency are of critical importance to hedge fund managers. Quality valuations are not simply an application of black box models, but require the synthesis of many variables and a level of sound judgment and business rationale beyond the model. VRC’s portfolio valuations practice group is a well-credentialed, long-tenured team offering diverse experience and deep, specific knowledge that helps clients make critical judgments. Our valuations stand up to questioning around derived valuations by auditors, boards of directors, or even the SEC.
Hedge Fund / BDC Services
Alternative Asset Valuations
Complex Securities & Portfolio Valuation Services for Illiquid, Hard-to-Value Securities
Valuations for complex instruments such as options, warrants, convertible bonds, contingent consideration, preferred & common stock