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Private equity: Preparing for revenue recognition

January 30, 2018 White Paper 7 minute read
Michele E. McHale Andrea Slabinski
The new revenue recognition standard will have a significant impact on private equity funds, fund managers, and portfolio companies. As implementation draws near, use our revenue recognition for private equity guide to prepare.

Viewpoint image, looking up at the sky and top of a tall glass-windowed building.The new revenue recognition guidance sharply contrasts with the current rules-based, industry-focused standards followed for decades. Under the new standard, private equity funds will need to evaluate how they structure and record fees and assess the impact on the recognition of carried interest and performance-based fees.

Private equity professionals will need to revise their approach to diligence, financial covenants, valuation models, EBITDA adjustments, and exit strategies and structure. Portfolio companies, too, will see a significant impact, particularly on when and how they recognize revenue and on the disclosures in their financials.

Use our resource guide for private equity firms and their portfolio companies to simplify the process. The guide includes:

  • Pre-deal considerations, such as due diligence and exit strategies
  • Post-deal considerations, such as EBITDA, earnout and management compensation, and debt covenants
  • What fund managers need to know
  • The five-step revenue recognition process for private equity
  • Timeline and implementation steps for private equity firms and portfolio companies

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