The Private Equity Reporting Group (PERG) has published its 11th report on compliance with the Guidelines for Disclosure and Transparency in Private Equity, known colloquially as the “Walker Guidelines”.

The Guidelines were last updated in May 2018. They are designed to assist companies owned by private equity (PE) firms (“portfolio companies”) with being transparent in their financial and narrative reporting. Principally, they require portfolio companies to disclose certain information in their annual financial report and to prepare a mid-year update. They also require PE firms to make certain disclosures on their own websites.

In addition, as we noted last week, the Guidelines will also now provide a starting point for those large portfolio companies that are required to report on the corporate governance arrangements they apply during their 2019 financial year.

The 2018 review covers a total of 56 portfolio companies backed by 51 PE firms. The key points arising from the report are as follows:

  • Following a dip in compliance from 86 per cent of portfolio companies in 2016 to 79 per cent of companies in 2017, in 2018 all portfolio companies in the sample complied with the Guidelines.
  • More portfolio companies published their annual report in a timely manner this year (81 per cent versus 78 per cent in 2017), and likewise their mid-year update (74 per cent versus 72 per cent in 2017).
  • However, the overall quality of disclosure appears to have declined. Only 73 per cent of portfolio companies prepared disclosures to a “good standard”, versus 80 per cent on a like-for-like basis in 2017.
  • All member firms of the British Private Equity and Venture Capital Association (BVCA) complied with the requirements applicable to them under the Guidelines.