The Definitive Guide to Hedge Fund Valuation

  • ID: 1206998
  • Book
  • 200 Pages
  • PEI Media
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The Definitive Guide to Hedge Fund Valuation - An in-depth A-Z guide to valuing investments fairly

How do you value assets fairly?

The era of cost is over. Fair value or mark to market is the order of the day, but misconceptions and misunderstandings as to what it is and how to determine the value of assets abound. The Definitive Guide to Hedge Fund Valuation is an in-depth guide to understanding, applying and reporting fair value. Primarily written by valuation experts Duff & Phelps, this guide provides investors and fund mangers with valuable tools and practical guides which shed light on a variety of subjects including valuation nuances and best practices in valuation. To help illustrate these subjects, the book contains examples of a number of different valuation scenarios, and provides a range of case studies.

Main features:

- Exclusive material on fair value valuation guidance written by financial advisory and valuation firm Duff & Phelps
- An introduction to fair value - why it exists and what function it serves, regulatory frameworks, historical timeline, other uses and a prognosis for the future
- A decision tree to guide fair valuation decision-making
- Valuation nuances of the most common scenarios and accompanying case studies
- An A-Z guide of over 70 of the most common applications, from absolute return to waterfall analysis
- Best practices on working with auditors, documentation, using third party valuation experts and internal policies and procedures
- Secondary and LP perspectives

Who should buy:

- Fund managers
- Investors
- Investment Advisers
- Lawyers
- Consultants
- Placement Agents
- Bankers
- Asset Managers
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List of A-Z entries

Author biographies

Chapter 1: Introduction
By David L. Larsen, Duff & Phelps LLC
Common misconceptions
Why fair value is vilified
Timing of mark-to-market rule changes
Suspending mark-to-market accounting

Chapter 2: Why fair value?
By David L. Larsen, Duff & Phelps LLC
Key reasons for adopting fair value

Chapter 3: Fair value defined
By David L. Larsen, Duff & Phelps LLC
What is fair value
Key dates in the history of fair value reporting

Chapter 4: Regulatory framework
By PJ Viscio, Elmer Huh and David L. Larsen, Duff & Phelps LLC
Accounting standard setters
US Securities and Exchange Commission
Industry self-regulating organizations
Role of the regulators in the financial crisis

Chapter 5: Valuation methodology
By Chris Franzek and David L. Larsen, Duff & Phelps LLC
Basic valuation approaches
Stage of development
Valuation of private loans
Limited partnership interests

Chapter 6: Valuation nuances
By Stephan Forstmann, Duff & Phelps LLC
Actively traded securities
Control equity (not actively traded)
Control equity with debt (not actively traded)
Non-controlling equity
Non-control equity with debt
Actively traded debt
Non-traded debt
Options and warrants
Structured products
LP interests
Management fee entity

Chapter 7: Investors in alternative assets
By David L. Larsen, Duff & Phelps LLC
Institutional investors
Fund of funds
Venture capital
Mezzanine debt
Distressed debt
Real estate
Absolute returns (hedge funds)

Chapter 8: The LP perspective
By Kelly DePonte, Probitas Partners‘Real’ valuations
Devil in the details

Chapter 9: The secondary market perspective
By Bradley Heffern and Katita Palamar, Cogent Partners
Who are the buyers and sellers?
Buyers’ valuation of secondary assets
Valuation of real estate
Valuation of hedge funds
How sellers view valuation

Chapter 10: Best practices
By Ross Hostetter, Duff & Phelps LLC
Valuation policy is a priority of fund management
Valuation policy should be well documented
Valuation policy is a working document
Transparency – using third-party valuation advisers
A sound valuation policy is a requirement

Chapter 11: Other uses of fair value
By Dan Patracuolla and PJ Viscio, Duff & Phelps LLC
Equity plan stock valuations
Impairment testing
Business combinations/purchase price allocation
Tax purposes
Fairness and solvency opinions

Chapter 12: Fair value: the future
By David L. Larsen and Warren Hirschhorn, Duff & Phelps LLC
Robustness of processes and estimates
Improved timeliness of reported values
Independent validation of fair value estimates
Decrease in the number of managers accompanied by increased use of funds of funds
International harmonization or convergence of accounting standards



Appendix I: An overview of FASB ASC 820, Fair Value Measurements and Disclosures
Appendix II: An overview of FASB ASC 946, Financial Services – Investment Companies
Appendix III*: International Private Equity and Venture Capital Valuation Guidelines
Appendix IV*: Private Equity Industry Guidelines Group Updated US Private Equity Valuation Guidelines
Appendix V*: Institutional Limited Partners Association Private Equity Principles


* These guidelines have been included as bonus material for hedge fund managers who are interested in private equity
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