Association News
6th Annual IVCA CFO Summit Addresses Portfolio Valuation
Taylor was joined by William Hupp, chief financial officer at Adams Street Partners and Mark Jensen, and partner and National Director of Venture Capital Services for Deloitte & Touche LLP. The panel was moderated by Jerry Sullivan, Managing Partner of Midwest Regional Technology, Media and Telecommunications for Deloitte.
“Last year we had way too much content for too little time,” noted Sullivan. “We had to audit the process with respect to our content.”
The focus of the conversation revolved around the protocol of assigning and communicating the value of a portfolio between a firm and auditor.
Because of external market conditions, Jensen noted that “many companies will be in a portfolio for a lot longer and all of that will require better disclosure because LPs will have their money in far longer than in the past.”
Accordingly, Jensen recommended a comprehensive documentation of correspondence between a firm and its auditor. “The GPs speak a different language than accountants,” he said. “They are so close to the investments that they use short-hand. We have to translate that into language accountants can get their arms around.”
Hupp of Adams Street worries that in doing this “we have just dumbed the process down.”
“It takes more time and effort to get everything done,” he said. “A lot of this is a lot of noise without substance. I don’t think the audits I’ve signed off on were less reliable than today’s.”
Hupp added that any asset, including a publicly traded company like Google, has variance in terms of how it is valued. Google’s market cap, for instance, is decidedly different than the value set by Morgan Stanley Internet analyst Mary Meeker.
All panelists agreed that as the private equity industry receives more public and media attention, there will be more scrutiny as to how the industry operates.
It will be important that we “don’t do or say anything stupid,” Happ said.
The CFO Summit was presented by Kirkland & Ellis LLP, Silicon Valley Bank and Willis. Additional panel conversations covered accounting and tax issues, market valuations, current fund teams, insurance strategies and contact management and reporting. A state of the industry luncheon address was given by Taylor.
