Topics included in the accounting update were: technical updates, investment valuations and best practices for the back office.

Federal issues were presented by Joe Karczewski and included change in treatments of: "clawbacks", deal costs and debt purchased at a discount and debt modification. Joe also examined proposed legislation's impacts and reviewed some planning opportunities.

State & Local issues were reviewed by Dorice Pepin who reminded us that almost every state is facing budget shortfalls, is looking for revenue, has very few limitations to raising taxes – particularly on non-residents – and is generally not transparent. These problems lead to many multi-state taxing issues. Dorice spent some time focusing on Illinois' particular problems and some tax planning considerations.

The always engaging & insightful Bruce Ettelson ran through the state of the market in terms of deal activity and fundraising. He then reviewed some trends in the fundraising process which has expanded to about 18 months with few funds hitting their target amounts. Bruce also discussed changes to "standard" fund terms in this climate which included liquidity provisions and alternative strategies. Some attendees were surprised by the discussion of an EU directive that essentially requires that limits fundraising in Europe unless the fund manager is registered and regulated by the EU. There was also a review of various regulations both in-force and proposed on placement agents, powers of attorney, SEC regulations and the overall regulatory landscape.

Lots of issues being simultaneously addressed by Congress: Regulation & Registration, Carried Interest, Valuation disclosures, placement agents, issues with political contributions. As all of these issues are addressed and negotiated, NVCA continues to try to "carve out" venture from various rules and regulations but it is not clear how "venture" will be defined. The PE Council is working to manage the impact of the regulations on large firms but the small to medium sized firms may face a sizable impact in terms of costs to comply with these various regulations. Estimates are that the minimum cost to comply is six figures annually which is a great impairment for funds with less than $1 billion under management – which includes the majority of Illinois based funds.

Matt ran through quarterly investments for venture & buyouts first focusing on National and then zeroing in on the Midwest. The credit crisis continues to seriously impact M&A nationally with buyouts comprising only 35% of US M&A transactions with a marked shift from bank loans to high yield bond financing. Fundraising continues to be down significantly with VC down 60% and Buyouts down 40%. Adding to the "troubles" is the likelihood that 10 year returns will be lower with year end write downs in all private equity fund types. The good news is that while returns are lower, they still represent a 300-500 bps delta over the public markets.

The panel reviewed key issues in the lifecycle of a fund. These included the early stage issues of fundraising, mid-stage issues of "middle office" management with LPs and portfolio CEOs and CFOs, and end-of-fund issues of cost management, funds management & exits. The panel included 3 seasoned CFOs: Nancy Corrie from Apex Venture Partners,  Bill Hupp from Adams Street Partners, and Roy Sroka from Wynnchurch Capital.