The Private Equity Reporting Group (PERG) was created in 2007 as an independent body to monitor the private equity industry’s compliance with Sir David Walker’s Guidelines for Disclosure and Transparency in Private Equity. This was in response to the increased scrutiny and negative publicity the private equity industry faced in 2007 from the media, trade unions and politicians, culminating in the Treasury Select Committee hearings.
Since then, the industry has embraced and adopted these Guidelines with over ninety portfolio companies currently providing additional disclosure voluntarily. Further detail and reports can be found on the Group’s website and below we set out the objectives and benefits of the Guidelines to the private equity industry.
In 2024, the PERG and the BVCA refreshed the Guidelines. The refresh took into consideration current and forthcoming changes to the narrative reporting landscape, as well as increased stakeholder interest in the private equity industry following high-profile transactions involving well-known businesses in the UK.
UK Private Equity Annual Public Reports 2024
"My hope and expectation is that implementation of these guidelines and recommendations will mitigate many of the specific concerns about large-scale buyout activity that have emerged in the recent past and will provide for better understanding of how private equity operates and its contribution to UK economic performance in terms of employment, productivity, investment and growth."
PERG and BVCA publish refreshed Guidelines and feedback statement
In 2024, the PERG and BVCA consuled to refresh the Walker Guidelines for transparency and disclosure in private equity. The refresh has ensured that relevant disclosures are in place as the private equity industry continues to grow both in scale and importance to the UK economy.
PERG and the BVCA invited comments from interested parties on options for updating the Guidelines. The consultation reviewed both the scope and requirements of the Guidelines, and introduced refreshed reporting requirements that continue to be comparable to those of the FTSE 250.
You can find the amended Guidelines here and the feedback statement following the consultation here.
Objectives of the Walker Guidelines
- To demonstrate the private equity industry’s commitment to transparency of its activities.
- To provide data to support the private equity industry’s contribution to the UK economy.
Benefits of compliance
- The Guidelines provide a framework for the private equity industry to enhance stakeholders’ understanding of our activities and address concerns about a lack of transparency in the industry. These stakeholders include government, regulators, media, employees, customers and the public more widely.
- The data published on the performance of portfolio companies supports the advocacy work the BVCA does on behalf of the private equity industry. It gives us the credibility and evidence we need when discussing the industry’s contribution to the broader economy in terms of employment, productivity, capital investment and growth. This in turn allows for more informed and proportionate decisions on policy and regulation by government and regulators. It also provides a returns attribution analysis which quantifies the impact of strategic and operational plans implemented under private equity ownership as well as the impact of leverage.
- By publishing annual reports on portfolio company websites and including further disclosure on private equity firms’ websites, the industry is able to demonstrate its commitment to transparency is real and here to stay.
- Enhanced reporting by portfolio companies and disclosures by private equity firms on their investment approach further demonstrates we are responsible owners and builders of businesses. The reputational impact benefits the portfolio company itself as well as its owner and the Guidelines support those portfolio companies with reporting ahead of a listing on a public market.
- The Guidelines are monitored by an independent body which further validates the private equity industry’s transparency commitment.
About PERG and its role
The Private Equity Reporting Group (PERG) was established in March 2008 to monitor the industry’s compliance with the Walker Guidelines and make periodic recommendations to the British Private Equity and Venture Capital Association (the “BVCA”).
This was in response to the increased scrutiny from stakeholders and the desire to understand more about the private equity industry’s approach to the businesses they invest in.
Since 2007, private equity firms operating in the UK have embraced and adopted the Walker Guidelines with over 70 of the largest UK private equity-backed companies currently:
- providing additional disclosures in their annual financial statements voluntarily; and
- making these accessible on the company websites.
What is the role of PERG?
- To review the extent of conformity with the guidelines of large UK private equity backed companies, through compliance or explanation, on an ongoing basis.
- To publish an annual report (The PERG Report) on the work of the Group.
- To review the EY performance report and provide the BVCA with comments.
- To keep the guidelines under review and to make recommendations for changes when necessary to be implemented by the BVCA (after due consultation) to ensure that the Guidelines remain appropriate in changing market and industry circumstances.
About the Walker Guidelines
At the beginning of 2007, Sir David Walker was asked by the BVCA and a group of major private equity firms to undertake an independent review of the adequacy of disclosure and transparency in private equity. Sir David completed this with a view to recommending a set of guidelines by the industry on a voluntary basis.
Private equity, via the implementation of the Walker Guidelines, is focused on demonstrating its commitment to transparency by publishing additional information on its largest UK businesses publicly.
The Private Equity Reporting Group (PERG), formed to monitor implementation, reviews private equity’s compliance with the Walker Guidelines annually with support from the BVCA, PwC and EY.
Each year this review is finalised with the publication of three reports.
Scope of the Guidelines
Portfolio company
For the purposes of the Guidelines, a portfolio company is a UK company:
- Where the majority of equity or control is acquired by one or more private equity firms in a transaction where enterprise value at the time of transaction exceeds £500 million and either:
- The company generates more than £200 million revenues of which 50% are generated in the UK; or
- The company employs more than 1,000 full-time equivalents in the UK.
- Private equity firms are defined in Part V of the Guidelines (Section 2.3).
- For a public to private transaction the enterprise value should be calculated as the market capitalisation together with the premium for acquisition of control including net debt.
- Infrastructure companies which are treated in a private equity-like manner by their owners and meet the criteria above, shall be included in the scope of the Guidelines. The assessment criteria for whether a company is treated in a private equity-like manner are included in Appendix B of the Guidelines.
- If a company meets the above criteria, it will remain in scope until such time as it no longer meets the ongoing inclusion of a portfolio company as outlined in Part V of the Guidelines (Section 2.2).
The above definition of a portfolio company reflects the changes made to the criteria in December 2024 and is effective for accounting year ends of 31 December 2024 and onwards.
Private equity firm
Private equity firms for the purposes of the Guidelines include private equity and ‘private equity-like’ firms. Private equity firms include those that manage or advise funds that either own or control one or more portfolio companies for the purpose of the Guidelines (as defined above). Private equity firms include those that acquire portfolio companies: i) with funds provided by one or more investors; ii) an exit/disposal of the company is envisaged and iii) may play an active management role in the company. This would therefore include, but is not limited to, other types of investment funds including infrastructure funds, pension funds, sovereign wealth funds and credit/debt funds. It also applies to firms that may be headquartered outside of the UK. Banks and credit institutions, other than their asset management operations, are specifically excluded.
Further details can be found in the Q&A on the PERG website.
BVCA/EY Walker Guidelines 2023 Webinar
An integral part of the BVCA’s mission is to promote and defend the industry via the Walker Guidelines. These guidelines are a set of voluntary requirements that promote transparency and disclosure in the Private Equity industry.
This webinar, hosted by Ciaran Harris, BVCA Policy Manager, will introduce the Walker Guidelines process before James Walker, Kelsey Gray and Disha, take us through the EY annual report on the performance of portfolio companies. The EY team will run through the information gathering process, including the information gathering template, and discuss some common errors and frequently asked questions.
This is a great opportunity for portfolio companies and their owners to learn more about the Walker Guidelines and, importantly, the EY process.
