IPEV Guidelines for Private Capital Valuation 

The IPEV Guidelines provide principles-based, industry guidance for estimating the fair value of private capital investments. They cover unlisted equity and debt investments, interests in private capital funds and strategies including venture capital, growth capital, buyouts, infrastructure and private credit. 

Their status matters. The Guidelines describe current best practice, but they are not accounting standards and do not decide whether an investment must be measured at fair value. The applicable accounting framework, law, regulation and fund documents remain controlling. Where they conflict with the IPEV Guidelines, those requirements take precedence. 

For private-capital CFOs, valuation committees and fund-finance teams, the practical task is therefore to apply the Guidelines within the entity’s reporting framework and to retain evidence that connects each conclusion to conditions at the measurement date. 

What are the IPEV Guidelines? 

The International Private Equity and Venture Capital Valuation Guidelines set out recommendations intended to represent current best practice when private capital investments are reported at fair value. They are maintained by the IPEV Board and are designed to support measurements consistent with International Financial Reporting Standards (IFRS) and US generally accepted accounting principles (US GAAP). 

The 2025 IPEV Valuation Guidelines were published on 11 December 2025. They supersede the 2022 edition and are considered effective for quarterly reporting periods beginning on or after 1 April 2026. Early adoption was encouraged. 

The Guidelines are relevant across a broad range of private capital investments and financial instruments. Their application is fact-specific: the instrument’s rights, the investee’s stage of development, available market evidence and the way market participants would transact all affect the valuation. 

How the IPEV Guidelines relate to IFRS 13 

IFRS 13 Fair Value Measurement defines fair value, establishes a measurement framework and requires disclosures when another IFRS requires or permits fair value measurement. It defines fair value as an exit price in an orderly transaction between market participants at the measurement date. 

The IPEV Guidelines use the same market-based premise. They translate that premise into guidance for private capital, where quoted prices are often unavailable and contractual terms can materially affect value. Following the Guidelines can support an IFRS 13 or US GAAP analysis, but it does not by itself prove compliance. The reporting entity must still reach and support its conclusions under the applicable accounting framework. 

This distinction affects language used in policies and reports. A valuation may be prepared by reference to the IPEV Guidelines, but calling it “IPEV-compliant” can imply a certification or mandatory standard that IPEV does not provide.

What changed in the 2025 IPEV Guidelines? 

The 2025 edition is an update rather than a replacement of the underlying approach. The IPEV Board made only a minor clarification to Guideline 1.4 and concentrated on explanatory text and additional application guidance. 

The principal changes include: 

• a clearer explanation of information that is known or knowable at the measurement date; 

• confirmation that the price of a recent investment is not automatically fair value at a later date; 

• further guidance on calibration, follow-on transactions and backtesting; 

• additional material on complex capital structures, liquidation preferences and scenario analysis; 

• expanded guidance for debt, convertible instruments, venture debt, convertible loan notes, simple agreements for future equity and advance subscription agreements; 

• further discussion of secondary-market discounts or premia when valuing fund interests; 

• expanded application guidance for transaction costs, real estate, sustainability, limited information and more frequent valuations; and 

• a new introductory discussion of artificial intelligence in the valuation process. 

The update does not make ESG or artificial intelligence a separate valuation method. Measurable sustainability factors are reflected only to the extent that they would affect market-participant assumptions. Where AI tools support data gathering, modelling or reporting, the valuer remains accountable for the inputs, process, output and conclusion. 

Core principles for private capital valuation 

Measure fair value at each measurement date 

Fair value is reassessed whenever a fair-value-based net asset value is reported. It is not carried forward automatically from the previous period. A conclusion may remain unchanged, but only after current facts, investee performance and market conditions have been considered. 

For an unquoted investment, the analysis assumes a hypothetical sale at the measurement date whether or not the investment is being marketed or the holder intends to sell. The objective is the price that would be received in an orderly transaction in the principal market or, if there is no principal market, the most advantageous market. 

Use market-participant assumptions 

Fair value is market-based rather than entity-specific. Forecasts, risk adjustments, multiples and discount rates should reflect assumptions that market participants would use, including their view of the investment’s rights, risks, growth prospects and liquidity. 

The fund’s holding intention does not replace this perspective. Nor does an internal target return determine fair value unless it is consistent with assumptions that market participants would use. 

Determine the unit of account 

The unit of account is the specific investment being measured and is dictated by the accounting standard that requires or permits fair value. Private capital structures may include ordinary shares, several classes of preferred shares, debt tranches, options and other rights. 

The valuer must consider how market participants would transact while respecting the applicable unit of account. Different classes do not automatically have the same value. Ranking, conversion features, liquidation preferences, anti-dilution terms, ratchets and other contractual rights may change the allocation of enterprise value. 

Use known or knowable information 

The valuation should incorporate facts, conditions and observable information that existed at the measurement date and were available, or reasonably available through routine enquiry or due diligence. Information created by a later event is not known or knowable at the earlier date. 

Post-period information can still be relevant if it provides evidence about conditions that existed at the measurement date. The file should record why the later evidence was considered adjusting or non-adjusting for the valuation analysis under the applicable reporting framework. Hindsight must not be used to rewrite the measurement-date assessment. 

Apply techniques consistently, but do not apply them mechanically 

Selected techniques should normally be used consistently between measurement dates and for investments with similar characteristics. A change is appropriate when it produces a measurement that better represents fair value, for example because the investee has moved from pre-revenue to revenue generation, new information is available or market conditions have changed. 

Any change in technique, weighting or significant input should be documented with its rationale and financial effect. Consistency is a control; it is not a reason to preserve an outdated method. 

Selecting an appropriate valuation technique 

The 2025 Guidelines group the principal techniques into three approaches: 

• Market approach: multiples, industry valuation benchmarks and available market prices. 

• Income approach: discounted cash flows or earnings, whether measured at investee-company or investment level. 

• Replacement cost approach: net assets, where value derives mainly from the fair value of underlying assets rather than earnings. 

No technique is automatically preferred for every investment. Selection depends on how market participants would price the asset, the maturity and economics of the business, and the reliability of available inputs. More than one technique may be used where that improves the assessment or provides a meaningful cross-check. 

Multiples 

A multiples approach may be appropriate for an established business with maintainable earnings or revenue. Comparable companies should be selected for relevant similarities in activities, markets, size, geography, risk and growth. The metric and multiple must be on a consistent basis, with adjustments for material differences supported rather than assumed. 

The enterprise value is then adjusted for items a market participant would consider, including surplus assets, excess liabilities and relevant contingencies. The resulting attributable value is allocated across instruments according to ranking, dilution and contractual rights. 

Discounted cash flows 

A discounted cash-flow technique may be suitable where cash flows can be estimated with sufficient reliability or where market evidence is limited. Forecasts and discount rates must be internally consistent. Risk already reflected in probability-weighted cash flows should not be duplicated in the discount rate. 

For standalone debt investments, amortised cost, face value or par value is not automatically fair value. Market participants would consider credit quality, coupon, expected repayment, maturity, embedded features and current market yields. Convertible debt may require analysis of both debt-like and equity-like components. 

Net assets 

The net-assets technique is generally most relevant where value derives mainly from the fair value of underlying assets, such as certain asset-intensive businesses and investment entities. It is not a shortcut to book value: the assets and liabilities used in the analysis must be assessed from a market-participant perspective. 

Price of a recent investment and calibration 

The price of a recent orderly transaction may represent fair value on the transaction date and can provide a starting point later. It is not a standalone valuation technique and should not become the default carrying value. 

Calibration tests whether a selected model, using market inputs at entry, reproduces the transaction price when that price represents fair value. At later dates, the model is updated for current market conditions and investee-specific developments. A follow-on round may provide useful evidence, but its size, participants, timing, rights and any strategic or distressed features need to be assessed before it is applied to other instruments. 

Early-stage investments and complex capital structures 

Early-stage businesses often lack maintainable earnings and have several share classes with different rights. Applying the headline price of a financing round across every share class can therefore overstate or understate the value of individual instruments. 

The Guidelines discuss scenario-based methods, the probability-weighted expected return method, the option pricing method, hybrid methods and, where an exit is imminent, the current value method. Complexity should be proportionate. A technically elaborate model is not superior if its critical assumptions cannot be supported or reproduced. 

Milestone analysis may help assess whether value has changed for an early-stage investment. Relevant evidence can include revenue growth, cash burn, profitability expectations, technical development, regulatory approvals, customer testing and market entry. Positive progress does not justify an uplift unless a market participant would pay for it at the measurement date. 

Valuing interests in private capital funds 

For an interest in a private capital fund, the investor may start with its attributable share of the latest reported NAV if the underlying investments are measured at fair value and the NAV is adjusted for significant known or knowable changes through the investor’s measurement date. 

Secondary-market pricing requires judgement. Trades may be opaque, may involve baskets of interests and may be based on an earlier NAV. Pricing can also reflect buyer- or seller-specific objectives. A transaction at a discount or premium to reported NAV does not automatically require the underlying portfolio valuations to move by the same amount. 

Where NAV is unavailable or unsuitable and reliable orderly secondary-market evidence is absent, an income approach based on expected fund cash flows may be considered. The subjectivity of that approach means its assumptions and sensitivity should be carefully evidenced. 

Market dislocation does not change the fair value objective 

Volatile or dislocated markets do not suspend fair value measurement. Nor does a difficult market mean that every observed transaction is distressed. Each transaction must be assessed on its facts to determine whether it was orderly and how much weight it deserves. 

The analysis should consider current effects on the investee’s customers, revenue, supply chain, cash requirements, covenant position and forecasts. Comparable-company metrics and multiples must be aligned to the same economic conditions, and scenario analysis may be appropriate when outcomes depend on how long the disruption continues. 

The main control is to avoid double counting. If lower expected performance is already reflected in cash flows, a separate risk adjustment should not duplicate the same effect. 

Sustainability factors in fair value 

The IPEV Guidelines address measurable valuation effects rather than sustainability reporting. Known or knowable sustainability factors should be reflected where they affect the cash flows, risk profile or assumptions that market participants would use. Examples may include energy, workforce, facilities, supply, compliance or decommissioning costs, and the likelihood of regulatory action affecting the business model. 

The analysis should avoid creating an unsupported standalone ESG premium or discount. The question is whether the factor changes what a market participant would pay at the measurement date. Sustainability disclosures and qualitative reporting remain outside the scope of the Guidelines. 

A controlled valuation workflow 

IPEV identifies a written valuation policy, documented assumptions and significant judgements, independent review and backtesting as features of a robust process. These are best-practice considerations, not universal legal requirements. The detailed governance model should reflect the fund documents, regulatory obligations and applicable accounting framework. 

A practical reporting-cycle workflow should establish: 

• Ownership: the fund manager or reporting entity retains responsibility for the fair value conclusion and the related financial-statement assertions, including where data preparation, modelling or administration is outsourced. 

• Preparation: the preparer obtains the latest investee information, reconciles it to source records, records data limitations and updates market inputs at the measurement date. 

• Methodology: the valuation file explains the selected technique, calibration, unit of account, capital-structure allocation, key assumptions and any change from the prior period. 

• Review and challenge: a suitably experienced reviewer or valuation committee challenges material inputs, comparables, scenarios, weighting and exceptions independently of the originating deal team where practicable. 

• Approval: approval is evidenced in line with the valuation policy and delegated authorities before NAV or financial reporting is finalised. 

• Retained evidence: source data, model versions, review comments, approvals, sensitivity analysis and conclusions are stored in a controlled audit trail. 

• Exceptions and escalation: missing data, late investee reporting, model limitations, unresolved challenge and significant judgement are escalated before the reporting deadline, with any temporary treatment documented and approved. 

• Backtesting: realised transactions and financing events are compared with previous estimates to understand differences and improve the process without applying hindsight to earlier measurements. 

Fund administrators and other service providers may perform agreed parts of the process, but outsourcing does not transfer the manager’s responsibility for the valuation conclusion or its oversight. 

Questions for valuation committees 

Before approving a private capital valuation, the committee should be able to answer: 

• What is the applicable accounting framework and unit of account? 

• Which information was known or knowable at the measurement date? 

• Why would market participants use the selected technique and inputs? 

• How was the model calibrated, and what has changed since entry or the last valuation? 

• Have security rights, debt terms, dilution and liquidation preferences been reflected? 

• Is recent transaction evidence orderly, current and relevant to the instrument being valued? 

• Are cash flows, multiples, discount rates and scenarios internally consistent? 

• Have data limitations and post-period evidence been assessed and documented? 

• What independent challenge occurred, and how were exceptions resolved? 

• What did backtesting reveal about previous assumptions or process bias? 

Summary  

The IPEV Guidelines provide a disciplined framework for estimating fair value across private capital, but reliable application depends on measurement-date evidence, market-participant assumptions and effective challenge. The 2025 edition adds useful guidance for current areas of judgement without changing the central fair value objective. 

For finance leaders, the most important outcome is a valuation file that explains what was valued, why the technique was appropriate, how significant inputs were supported and who reviewed and approved the conclusion. Where valuation cycles place pressure on fund accounting, reporting controls or audit preparation.

Frequently asked questions