Private Equity International | How Private Equity Valuations Measure Up

Feb 2023

Originally posted by Private Equity International on February 28, 2023.

Private equity firms have been navigating market volatility for the past 12 to 18 months, and public market valuations have decreased, in certain sectors, by approximately 50%. Valuations are a key tool used to determine the fair value of general partners’ portfolios.

As a result of the COVID-19 pandemic and unrest in Ukraine, the International Private Equity and Venture Capital Valuation released updated valuation guidance, outlining the potential impact valuations may face in turbulent markets as well as other considerations for debt instruments, bridge financing and structuring impacts. The guidelines emphasize that the premise of fair value remains the same and valuation processes should remain consistent, even during times of volatility.

Richard Olson, Managing Director in Lincoln’s Valuations & Opinions Group, commented, “We always take a ‘facts and circumstances’ approach to any valuation. And that means taking an appropriate approach to determine fair value.”

Additional insights on the valuation process are outlined in the original article.

Summary

  • Lincoln International’s Richard Olson shares with Private Equity International that utilizing a facts and circumstances approach to valuations is crucial when determining fair value.

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