The Private Equity Reporting Group (PERG) has published its latest annual report on the private equity industry's compliance with the Guidelines for Disclosure and Transparency in Private Equity (known as the Walker Guidelines). PERG has also published a 2023 guide to good practice reporting by portfolio companies.
The aim of the Walker Guidelines, which were first published in 2007, is to increase transparency in the private equity industry through enhanced reporting and disclosure by the largest UK portfolio companies (that is UK companies acquired by one or more private equity firms where certain size thresholds and employee numbers are met) and their private equity owners.
Under the Guidelines, portfolio companies in scope are expected to include additional disclosures in their annual report and accounts on areas such as the private equity funds that own the company, the composition of the board, key performance indicators (KPIs) and a description of the principal risks and uncertainties facing the business. PERG monitors the industry's compliance with the Guidelines and publishes a report each year on its findings.
The key findings in PERG's latest annual report include:
- 60% of the portfolio companies sampled prepared disclosures to at least a good standard, compared to 67% in 2021;
- 52% of companies included in their annual report a statement of compliance with the Guidelines, compared with 62% in 2021; and
- there has not been a notable increase in the quality of disclosure on non-financial KPIs, with many companies lacking the level of detail required for a deeper understanding of why they are the company's strategic priorities.
The Guidelines are currently being reviewed to take into account changes in the broader narrative reporting landscape for both private and listed companies, the increased focus on climate change, and to enhance the level of understanding of the Guidelines amongst the private equity industry's stakeholders.
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