Walker report on private equity: key points
Article Date: Jul 17 2007Sir David Walker sets out a number of recommendations aimed at encouraging the private equity industry to be more open. The key points in his report are summarised here.
1. Private equity needs to be more transparent
The industry is seen as unnecessarily secretive, leading to a ‘major transparency and accountabilty gap’. Greater openness would help it persuade stakeholders, the media and the public that it is good for the economy.
2. Guidelines should remain voluntary
Buy-out firms and private equity companies should either comply with the guidelines, or explain the reasons for their non-compliance.
3. Venture capital is distinct from private equity
Walker does not apply his recommendations to venture capital, which he says has a key role in supporting new enterprise. He focuses mainly on buy-out companies with more than 1,000 employees, or whose enterprise value exceeds £500 million.
4. Buy-out companies to provide ‘enhanced reporting’
Larger buy-out companies, as defined above, should make their annual reports public within four months of the year-end, as opposed to the nine months currently required. They should also provide details on board members, and set out the values they adhere to in their dealings with employees, customers and suppliers.
5. Private equity firms to publish annual reviews
These reviews would contain information about senior team members, outline the firms’ values, and indicate how they have performed financially (and how they have achieved this performance). They should also make themselves more accessible to the media.
6. Industry-wide analysis
Data on buy-out firms should be collected and disseminated by an industry-wide body, which would have a key role in enhancing private equity’s credibility and authority.
A consultation period on the report will continue until 9 October.
