Web Site: www.aimr.com
Phone: (800) 247-8132
Principal Contact: Kathy Valentine, Marketing Communications, (434) 951-5348
President & CEO: Thomas Bowman
Address: 560 Ray C. Hunt Drive, P.O. Box 3668, Charlottesville, VA. 22903
Regulatory Authority: While membership is voluntary, members must sign and adhere to a code of ethics and standards of conduct annually. AIMR is not a regulator, but a professional association, whose members choose to adhere to the organizations tenets through their annual renewal.
AIMR Guidelines Available at:
Membership Structure and Reach: Formed in 1990 through the combination of the Financial Analysts Federation (established in 1947) and the Institute of Chartered Financial Analysts, which established the Chartered Financial Analyst Program in 1963, AIMR manages programs and services for its more than 100,000 members and CFA candidates. The group is headquartered in Virginia, with a satellite office in Hong Kong and has several functions: development of professional standards and conduct, hosting a dozen-plus conferences annually, publishing several periodicals, performing research, supporting its members through volunteer services, and training, testing and certifying financial analysts worldwide.
At the same time that PEIGG is trudging forward, another group, less obviously tap-dancing on eggs, has already issued its proposed valuation guidelines for venture capital firms. That group is the Association of Investment Management and Research (AIMR) and it issued its proposed guidelines as part of its Global Investing Performance Standards (GIPS). GIPS (and its American subset, performance presentation standards) are used by AIMR’s 100,000 strong membership of certified financial analysts in 100 chapters around the world.
AIMR is a not-for-profit organization, like the NVCA, but which Jonathan Boersma, AIMR’s Vice President for Professional Standards, characterizes as a professional association, as opposed to a trade association. AIMR is more like the AICPA (American Institute for Certified Public Accountants) in that it provides training and certification of members. AIMR’s certifications are well known in the investment banking community, where research analysts are typically members.
Take one look at its draft document on standards, definitions, and implementation or at its calculation formula for IRR, and the atmosphere of handshake deals, club-like atmosphere of guys sitting around creating wealth is gone. The AIMR crowd is less congenial than the colleagues of the venture industry, more affable than the green eyeshade CPA community, and well ahead of everyone else in the United States with regard to the publication of a well-thought-out set of guidelines.
Included in its proposal are standards for presentation of results and a uniform format for showing results. Most importantly the proposal reduces the variations in calculation methods for IRR to one documented process so there will be no variation in how numbers are calculated and less confusion when trying to compare IRRs from one firm to another. The document also provides clear separation of traditional fixed-life venture funds, captive funds and open-ended or evergreen funds.
Boersma reports that AIMR and its committee have been working more than two years on the proposals, which are now posted on the AIMR Web site for public comment. The drafting committee, headed by Boersma, includes Venture Economics (publisher of VCJ), JPMorgan, the Ontario Retirement Fund, CalPERS, State Street, Jafco Ventures and 3i.
There is already dissent-at least from abroad. Nityen Lal, a director of NAZAR Technology Finance of the Netherlands, posted an email in a public area on AIMR’s Web site. In it, he claims that “the fair value methodology outlined by the AIMR is broad, subjective, and vaguer than the current guidelines extended by the EVCA and BVCA.”
This inevitably leads the reader to look for what is happening in Europe (see BVCA Profile, page 32, and EVCA Profile, page 33). What the reader will-much to the astonishment of those accustomed to hearing that United States accounting standards are more stringent than those of Europe-is a body of work even more complete than that proposed by AIMR. Still, by comparison with other interested parties in the United States, AIMR has taken an early leadership position.