2021 Year End Valuation Considerations for Private Equity
With year-end around the corner, the holiday season coming quickly it is a good time to reflect on our accomplishments and plan for the new year. A new year that brings the opportunities for new beginnings.
At CLA, we have experienced an incredible year. Our private equity team has worked on close to 400 quality of earnings reports. Total enterprise value of approximately $7 Billion. We now are now getting a lot of questions around a year-end valuation matters.
First, we are getting questions around purchase price allocations (“PPAs”) (ASC 805). With PE clients working on deals with December closings as sellers want to take advantage of the current tax regime year end, timing of work becomes critical. The sooner PPAs for the opening balance sheet/2021 audits are scheduled the better;
Second, portfolio valuations (ASC 820): Many of our clients are outsourcing all or some portion of their internal valuation work for a variety of reasons. Most notably, funds, and their LPs, expect a greater level of scrutiny from the SEC and as such are formalizing their valuation policies/procedures now in order to meet upcoming deadlines.
If these are topics your thinking about, we would love to speak to you to talk about how we could help.
Craig Arends is a principal at CLA and is the managing principal of CLA's private equity practice. Craig brings a concentration of experience in providing accounting and transaction structuring advice for leveraged recapitalizations, purchase accounting and SEC reporting, assessing quality of earnings, and GAAP accounting. He has far-reaching experience with critiquing financial models and reviewing target companies' financial performance to identify cost reductions and/or operating efficiencies Craig has more than 30 years of experience in public accounting serving public companies, private equity groups, and companies, including a term as principal in charge of a Big Four Capital Markets Group in Moscow, Russia. He has led financial accounting due diligence projects for private equity investor groups and venture capital funds, primarily in the technology, communications, and manufacturing industries, as well as assisting with Foreign Corrupt Practice Act matters ranging from investigation of payments made, validation of compliance with corporate policies, and review of proposed transactions to ensure compliance. When not working, Craig enjoys watching any sports, but his most favorite are baseball, football and soccer.
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