The issue of private company valuations in relation to U.S. accounting standards has long been a challenging topic for venture capital firms and their portfolio companies.  The NVCA CFO Task Force has been struggling with the implications of FAS 157 since its 2009 inception.

Late last week, we were pleased to see the AICPA/FAF/NASBA announce the formation of a Blue Ribbon Panel to address standards for private companies.  We were further heartened that one of our own – Jason Mendelson, co-founder of The Foundry Group in Boulder, CO and NVCA Board member was chosen to serve on the panel. Jason has long been an advocate for private company accounting standards that reflect the reality that these companies are not publicly traded.

On his selection, Jason shared the following with NVCA:

“Currently, the methods of valuing private companies, while well-intentioned, are not relevant to estimating a fair value calculation for company investors or their limited partners. I’m looking forward to working with the committee and applaud the efforts to set up the panel. Hopefully, we will be able to have meaningful impact on improving the way that private companies are valued so that the results are both relevant and informative for all stakeholders.”

Also chosen for the panel was Kewsong Lee of Warburg Pincus who will represent the private equity asset class. To see a full list of panel members, you can view the press release here.

We are looking forward to the panel recommendations due in approximately one year’s time. Operators are standing by.

Questions or comments? Email John at jstaylor (at) nvca (dot) org.