IPEV 2025: Unchanged Principles, but more clarified expectations

The latest version of the International Private Equity and Venture Capital Valuation (IPEV) Guidelines were published last month (December 2025) and are considered in effect for quarterly reporting periods beginning on or after 1 April 1 2026, with early adoption encouraged.

Without revolutionising the existing framework, the new 2025 IPEV Guidelines confirm a deeper trend in today’s environment: valuation in private equity is becoming increasingly technical and demanding high quality documentation.

In existence since 2005 and updated every three years to reflect changes to fair value standards and developments in business, investment and valuation practices - IPEV guidelines are globally accepted and have been considered the gold standard in private capital valuations for over two decades. The guidelines focus on fair value measurements and comply with both International Financial Reporting Standards (IFRS) and United States Generally Accepted Accounting Principles (U.S. GAAP).

There are no fundamental changes in IPEVs core principles, the Fair Value principles are also unchanged.  The 2025 edition includes some targeted clarifications. New explanatory sections address specific market developments which are becoming more prevalent. The updates include:

• Underling importance of robust documentation and traceability - Valuation governance demands houses demonstrate how valuations were derived, how assumptions evolved, and how judgment was applied. Inputs, assumptions, and methodologies must be clearly documented. Valuation changes must be explainable and reviewable.
• Reinforcing the need to Calibrate. One of the most powerful concepts in IPEV  - apply it thoughtfully. When the public marks in the comp basket move, it can be challenging to estimate what multiple market participants would pay for your illiquid asset. Calibration is an essential tool, supporting valuers estimate fair value at subsequent measurement dates post the acquisition. Calibration ensures assumptions in the valuation are carefully considered, reasonable and defensible. Calibrate at entry, revisit at each measurement date – and augment to market movements and company performance.
• Clearing up the known & knowable dilemma - New explanatory text added to the 2025 edition, reflects in practice how this can be a nuanced area due to how the known and knowable concept may incept with the concept of subsequent events. Valuation practitioners need to consider the particulars of their valuation on a case-by-case basis and may need to apply judgement.   
• Considering complex capital structures - Convertible debt, complex instruments, liquidation preferences and other conversion options all have become more prevalent in deals, especially in venture and high growth industries. New dedicated section in IPEV 2025, expands guidance considerably, setting out how option, scenario or hybrid valuation models maybe better tools to assess FV, in favour of more simplistic alternatives.  Judgement selecting a methodology is needed. Mere existence of contractual terms don’t negate need to consider other principles (calibration,  willing buyer-seller & market participant perspectives).
• New guidance for AI & automated models ... a helpful assistant,  but no replacement for human challenge. Given the rapid progress in this area, IPEV 2025 provides a new guidance on artificial intelligence (AI).  There is a clear message,  A model without human judgement – is not compliant with international valuation standards. Use AI to support components of the valuation process; but the key professional judgement and scepticism to estimate market participant behaviour and verify inputs, is the responsibility of the Human valuer.  
• More frequent and timely valuations - With the advent of increased levels of non-institutional capital being raised in the Private capital space – alongside the emergence of Evergreen structures, requiring more frequent valuation marks; IPEV 2025 highlights existing industry norms which typically sees houses operating a quarterly process, will not be sufficient for all structures and investor needs. Expanded commentary recognises some challenges practitioners may encounter when increasing the cadence of the valuation frequency - and challenges to be mindful of when applying the guidelines.
• More guidance provided for secondary transactions and how to consider discounts or premia, particularly when there is an opaque market for such assets; and
• Renamed “sustainability” section provides further clarity to the ESG section introduced in IPEV 2022. The view of the IPEV Board is that to determine fair value, ESG considerations should by definition already have been captured by applying the existing valuation principles (maintainable earnings, cashflow, calibration to basket etc).  Consequently separate ESG valuation standards are not deemed to be required. 

Although 2025 IPEV Guidelines don’t overturn any major valuation principles  set out in previous editions, they do introduce some substantive clarifications which explicitly strengthen topics that have become more relevant to market participants recently. This includes underlying discipline needed around calibration, tackling complex capital structures and hybrid instruments, considering transactions after the measurement date - and also planning valuation governance consideration given the rise of AI Tools.

We’ve set out further information on each of these important areas on our Valuation Glossary page .

Calibration is required at each measurement date.

The 2025 IPEV Guidelines place emphasis on a reality sometimes reluctantly accepted by practitioners - fair value should evolve from one measurement date to another, because typically company performance and market conditions evolve.  Assumptions to a valuation model which remain strictly unchanged over time, should be the exception.

IPEV 2025 reemphasis that practitioners start point at measurement date, shouldn’t be to select the public comps and apply a discount. 

A calibration approach considers what was paid in the orderly transaction at the initial acquisition date, assess how the purchase multiple compares to those in the listed comparable basket –  then at each subsequent measurement date considers movements in the public and arguments to performance of the portfolio company.

One major development in IPEV 2025, concerns valuation of instruments with complex capital structures. These may require a dedicated approach, beyond the “simple” methods that allocate enterprise value. The message is increasingly complex capital structures, may need to be appropriately addressed in the valuation.

Convertibles and other hybrid instruments are now covered in a new dedicated section in the updated IPEV 2025 guidelines. This section covers instruments such as Venture Debt, SAFEs, and ASAs), which have become ubiquitous in private markets. The guidelines talk about several valuation methods which may be appropriate including scenario-based methods, option pricing and hybrid methods.

A central principle to IPEV.  But area that deceptively often requires thoughtful consideration from practitioners and application of judgement. Nuanced matters needs to be considered case by case, especially regarding treatment of data received in the subsequent event period.  The additional 2025 guidance will support some of the challenges practitioners frequently encounter.

The exam question that practitioners need to consider is - does the data received indicate considerations that existed at the measurement date?  And could this information be known and knowable? If yes – it typically would be a situation that suggests valuation adjustment would be appropriate.  However, care is needed. 

Further it is not necessary to halt a valuation reporting process, waiting for coterminous audited data to arrive – utilising best available is satisfactory. 

The updated guidelines are clear that professional judgment remains central to valuations, technology augments it.

The IPEV Board, aligns with the IVSC Standards Review Board, and underlines that automated valuation models and AI are not substitutes for professional judgment or scepticism. However, when used appropriately, technology can significantly enhance valuation quality and efficiency. Human judgment is essential to ensure valuations are fit for purpose.  AI and automation should support, not replace, valuation professionals.