Portfolio Valuations for Private Equity firms, Hedge Funds, Venture Capital – ASC 815, 820

Most hedge fund advisors are required to register with the SEC under the 1940 Investment Advisers Act and will be subject to inspections by the SEC. As institutional investors’ appetite for investing in alternative asset funds continues to be strong, regulatory oversight is receiving more attention.  In response to these changes, hedge funds are implementing new risk management procedures including obtaining independent valuations of illiquid positions. Vantage Point Advisors provides independent valuations to the alternative asset industry.

Hedge Fund and Derivatives Valuation Services

Vantage Point Advisors recognizes the need of alternative asset fund managers to respond to regulatory and investor concerns over internal valuation practices and procedures, and provides independent valuations for a broad range of investment strategies using sophisticated industry-standard pricing models. In addition to our internal resources, we consult with a diverse team of professionals on an as-needed basis, including external academic advisors with specific product or industry expertise to value investments held by hedge funds and private equity sponsors.

Vantage Point Advisors provides independent portfolio valuation services and advice to investment fund managers, third-party administrators, and investors, including:

      - Financial Reporting Valuation Services

      - Secured and Unsecured Debt Instrument Valuation Services

      - Illiquid Equity Interest Valuation Services

      - Convertible Security, Warrant, and Option Valuation Services 

      - Derivative Security Valuation Services

Independent estimates help assure compliance with a fund’s applicable accounting standards, including ASC 820.  Private investment funds, including private equity funds and hedge funds, can provide comfort to their investors, auditors, and fund managers by seeking independent estimates of the fair values for Level 2 and 3 assets (per ASC 820). 

Complex Derivatives

Complex derivatives, including convertible securities, require sophisticated valuation tools, models and approaches. Vantage Point Advisors has the knowledge and expertise to value these derivatives for tax and financial reporting purposes. Through the use of the Black-Scholes-Merton model or other option pricing models such as Monte Carlo simulation, we have the expertise required to value these complex securities.

ASC 815 (formerly SFAS 133 and 155) establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, (collectively referred to as derivatives) and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value.

The accounting for changes in the fair value of a derivative (that is, gains and losses) depends on the intended use of the derivative and the resulting designation.