Ethos capital valuation principles

The basis of valuation of all investments is fair value.

The basis of valuation of all investments is fair value. Fair value is determined as of the end of each quarter.  All investments are valued in accordance with the International Private Equity and Venture Capital (“IPEV”) Valuation Guidelines.

As stated above, the Company’s investments comprise commitments into Funds, which in turn invests in Portfolio Companies in which the Company has an indirect interest. 

The General Partners of these Funds provide quarterly NAV statements as calculated from the Investment Advisor’s valuations, which the Directors of the Company use to determine the fair value of a Fund.  The valuations of the Investment Advisor is audited every six months by their auditors.


The Investment Advisor determines the individual fair value of each Fund’s underlying Portfolio Companies at the end of each quarter and is approved by its Board of Advisors twice per year.  The policy of the Investment Advisor to determine the fair value of the Portfolio Companies, which is in accordance with the IPEV Valuation Guidelines, is noted below.

Initially, and for a limited period after the acquisition date of an investment, the ‘Price of Recent Investment’ methodology is generally used.  At each reporting date after the initial acquisition date, an assessment is made as to whether subsequent changes or events necessitate a change in the fair value of the investment.  If so, an ‘Earnings multiple’ methodology is generally applied.

In terms of the ‘Earnings multiple’ methodology, an appropriate and reasonable valuation multiple is applied to the maintainable earnings of the investment.  For each investment an ‘Earnings before interest tax depreciation amortisation’ (“EBITDA”) or an ‘Earnings before interest after tax’ (“EBIAT”) multiple is generally considered appropriate to determine the enterprise value for the investment.  In deriving a reasonable valuation multiple, the Investment Advisor develops a benchmark multiple, generally with reference to the multiples of comparable publicly traded companies adjusted for finance costs (i.e. multiples have been de-geared).  The benchmark multiple is further adjusted for points of difference relating to risk profile (geographic, operational, financial, and liquidity risk factors) and growth prospects.

Maintainable earnings are typically based on historical earnings figures that are considered to be appropriate and relevant. Once an enterprise value has been determined, it is adjusted for surplus assets, excess liabilities, and financial instruments ranking ahead of the Fund’s investments. The resultant attributable enterprise value is then apportioned to all investors, included in the Fund’s investments, based on their respective participation in each underlying security of the investment.

Although the best judgement is used in determining the fair value of these investments, there are inherent limitations in any valuation technique involving securities of the type in which the Funds invests. Therefore, the fair values presented herein may not be indicative of the amount which the Funds could realise in a current transaction.

The IPEV Guidelines set out the best practice where private equity investments are reported on at fair value, and are intended to be applicable across all private equity funds and to all financial instruments commonly held by private equity funds. For further information on the IPEV Guidelines, see

For further information on Ethos Capital’s valuation principles, please refer to the Unaudited condensed interim results & financial statements for the six months ended 2016.