COVID-19 is having significant implications on a wide range of audit areas in the private equity industry, including valuations, disclosures, projections and compliance with debt agreements. Jeff Rojek, National Audit Partner for Private Equity, discusses the top-of-mind audit issues facing deal teams and portfolio companies.
Video film date: 5/7/2020
Hello, I’m Jeff Rojek, Partner in KPMG’s Private Equity Practice based in New York City. As you can see I am currently sheltering in place in sunny Chatham, New Jersey. I’m the Global Lead Partner at some of the firm’s larger Private Equity clients and I am also the Audit Leader for the practice. I first wanted to say that I hope you and your families are safe and healthy.
I wanted to share with you today some of the Audit related topics that we’ve been discussing with deal teams and their related portfolio companies, particularly those issues that are significantly impacted by COVID 19 and the current situation.
As you may expect, quarter 1 valuations of private companies, both the debt valuations and equity valuations are of particular interest. We’ve been discussing subsequent event disclosures in the current round of financial statements. Cash flow projections and business projections for the next 12 -18 months and their related audit impacts. And debt convent and compliance are all hot issues that we have been talking to both deal teams as well as their portfolio companies.
As important, this is audit RFP season. Private Equity portfolio companies that are looking for a public exit in the future or simply reevaluating their current auditor relationship, believe it or not are still issuing RFP’s even in this shelter in place world. KPMG has been enthusiastically responding and winning audit mandates. These companies are looking 2 – 4 years out and believe having the right audit firm is important to the future exit strategy.