Why the move to the UK?
The alignment of our US and UK asset management practices is critical given the expanding global footprint of US asset managers and the growing trend of investments in alternative funds by European institutional investors.
How does private equity auditing differ in the US and the UK?
There are of course technical differences between private equity auditing in the US and the UK – evolving accounting standards around valuation in terms of changes in IFRS and UK GAAP for example.
However, the overall focus of our audit approach remains the same and a key focus continues to be around the valuation of private equity companies. This is especially the case as a result of the current market volatility, the low volume of transactions to provide meaningful data points and the number of houses fundraising who want to demonstrate good performance to future investors.
What are you seeing that private equity managers may not be aware of but should be?
In the US, the biggest challenge remains the regulatory landscape. Private equity houses should continue to consider the impact of this landscape on their business operations, both internally and with investee companies (including emerging markets) as well as the quality of deals and varying corporate governance issues they may also face; fundraising is also an issue to be considered.
In the UK, fundraising is the particular challenge at the moment. It is taking longer due to the level of due diligence (including operational) and scrutiny from investors has increased and therefore is a need and challenge for more transparency and reporting. We are seeing the number of requests for third party assurance around controls and historical track record increase also along with a pressure on the level of fees, carry arrangements and the level of co-investment required from managers.
I would say as a result, really understanding your business (including succession planning) is something that both UK and US houses should be keeping at the front of their minds at the moment.