1. Welcome to EQUITY ISSUES, a short note on a relevant issue in the private equity and
venture capital industry.
If you would like to discuss any of the points we raise below, please contact me or one of
our other lawyers.
Claire Cummings
020 7585 1406
claire.cummings@cummingslaw.com
www.cummingslaw.com
EQUITY ISSUES
Guidelines Monitoring Group publishes updated guidelines on good practice
reporting by private equity portfolio companies
On 5 February 2014, the Guidelines Monitoring Group (the “GMG”) published an
updated version of its guidelines on good practice reporting by private equity portfolio
companies under the Walker Guidelines (the “Guidelines”).
The Walker Guidelines set out a voluntary code requiring larger PE firms to provide
greater public disclosure of their activities, with the aim of improving industry
transparency, and the first guidelines were published in 2007. The Guidelines only apply
to those private equity firms which are authorised under the Financial Services and
Markets Act 2000, but voluntary adherence is encouraged. The GMG is responsible for
monitoring the on-going relevance of the Guidelines and industry compliance with them.
The Guidelines impose enhanced reporting obligations on portfolio companies, which go
further than those ordinarily applicable to UK private companies, in an attempt to narrow
the reporting gap between quoted company and PE-controlled private company
obligations.
A “portfolio company” is a UK company which has been acquired by one or more PE
firms either:
(i) in a public to private transaction where the market capitalisation, together with
premium for acquisition of control exceeded £210 million; or
(ii) in a secondary or other non-market transaction where the enterprise value at the time

2. of the transaction exceeded £350 million.
It is generally considered that the Guidelines provide clear and detailed information for
PE firms, as well as useful examples to illustrate good practice. It should be noted that the
substantive content of the 2014 Guidelines remains unchanged from the version issued in
March 2012. In line with the version published in February 2013, the Guidelines include
updated examples of reporting drawn from portfolio companies' accounts over the last two
years that the GMG considers to represent good practice.
In its updated Guidelines, the GMG notes that the annual report when taken as a whole
should be considered fair, balanced and understandable to a user of the accounts.
Guidance on what constitutes a good annual report includes that reports should be
tailored, avoid clutter and boilerplate language and be drafted on a consistent basis, with
linking between each area covered.
In relation to the definition of a portfolio company for the purposes of the reporting
guidelines, the GMG is currently reviewing whether the transaction size criteria should be
lowered to bring more portfolio companies into scope. If there are changes, the GMG
intends to communicate these during 2014.
The GMG will also review how the new narrative reporting requirements of BIS and the
FRC applicable to listed companies will be incorporated into the Guidelines.
The updated Guidelines will be applicable for reporting firms with a year-end in
September 2014 onwards. The GMG will publish further guidance in the spring, which it
will aim to finalise by June 2014.
This document is for general guidance only. It does not contain definitive advice.
Cummings
Tel: + 44 20 7585 1406
Mob: + 44 7734 057 327
www.cummingslaw.com
10 February 2014