With the Alternative Investment Fund Managers Directive (“AIFMD”) having entered into force on July 22, 2013, Alternative Investment Fund Managers (“Managers”) are now responsible for establishing and maintaining appropriate procedures concerning the valuation of assets in the Alternative Investment Fund (“Fund”). In addition, written valuation policies and procedures must be established to clarify valuation methodologies and roles of various parties involved in the valuation process. While the valuation work may be performed by the Manager, apparent and/or actual conflicts of interest would require the appointment of an external valuer, such as Houlihan Capital.
Within the AIFMD, the European Commission outlines certain requirements to which the external valuer must adhere. For example, the external valuer may not further delegate its responsibilities once it has been engaged by a Fund.
Of equal importance is the professional guarantee to be provided by the external valuer to the Fund which serves as a demonstration of its ability to perform the valuation function. The professional guarantee is a written statement signed by the external valuer and must include evidence of:
- Sufficient personnel and technical resources available by the external valuer to perform an independent valuationof the Fund’s assets;
- Adequate procedures put in place by the external valuer to ensure that the valuations are being performed in an independent and proper manner;
- Adequate knowledge and understanding of both the Fund’s investment strategy and the assets that the external valuer has been appointed to value; and
- Sufficiently good reputation and sufficient experience with valuation by the external valuer.
Further, if the external valuer is subject to mandatory professional registration with an entity in the state where it is established, the professional guarantee should include the name and authority of this entity.
By providing the professional guarantee, the external valuer attests that it has the right qualifications and capabilities to perform proper and independent valuations in accordance with AIFMD.
Houlihan Capital can provide a professional guarantee based on its professional experience and valuation expertise and has a history of working closely with regulators, auditors, third-party administrators, investors and some of the world’s largest private investment funds. Houlihan Capital has a dedicated team of experienced valuation analysts with strong educational credentials and years of valuation experience. As a SOC Compliant organization, Houlihan’s system is designed to both meet the internal control needs of its clients and to ensure that valuations for its clients are performed in an independent manner. In addition, our valuation engagements and related fees are never contingent upon developing or reporting predetermined results.
Houlihan Capital is a leading, solutions-driven valuation, financial advisory and boutique investment banking firm committed to delivering superior client value and thought leadership in an ever-changing landscape. The firm has extensive experience in providing objective, independent and defensible opinions of value that meet accounting and regulatory requirements. Houlihan Capital is a Financial Industry Regulatory Authority (FINRA) and SIPC member, committed to the highest levels of professional ethics and standards.
