IVSC and Private Credit: Why International Valuation Standards Matter

What the IVSC actually is

The International Valuation Standards Council (IVSC) is the independent, not-for-profit standard-setter for the valuation profession globally. It sits in the same institutional tier as the IFRS Foundation on accounting or IOSCO on securities regulation, and its core output — the International Valuation Standards, or IVS — is the closest thing the valuation world has to a single global rulebook.

IVSC's legitimacy comes from its breadth of constituency. Its membership comprises more than 85 Valuation Professional Organisations worldwide, including the Royal Institution of Chartered Surveyors (RICS), the American Institute of CPAs (AICPA), the CFA Institute and the Appraisal Institute. Technical work is delegated to three asset-specific boards: the Business Valuation Board, the Tangible Assets Board, and — most relevant for private credit — the Financial Instruments Board.

The structure of IVS and where private credit lives

The IVS are organised into two tiers. The General Standards in the current (effective 31 January 2025) edition run from IVS 100 through IVS 106 and apply to every valuation assignment regardless of asset class. Practitioners citing the previous (2022) edition will be familiar with the older IVS 101–105 numbering; the 2025 edition reordered and renumbered the General Standards, and managers whose valuation policy still references the older numbering should refresh. The Asset Standards apply to specific asset classes — IVS 200 for Businesses and Business Interests, IVS 210 for Intangible Assets, IVS 400 for Real Property, and IVS 500 for Financial Instruments.

A direct lending position, a mezzanine tranche, a unitranche loan, or a CLO equity interest all fall under IVS 500. That is the chapter that a manager claiming "IVS-compliant valuation" in an offering memorandum is invoking. It is also the chapter that has received material technical attention from the Financial Instruments Board over recent editions.

• IVS 100 — Valuation Framework: the foundational principles for any IVS-compliant assignment
• IVS 101 — Scope of Work: the engagement letter for the valuation assignment
• IVS 102 — Bases of Value: market value, fair value, investment value and other defined bases
• IVS 103 — Valuation Approaches: Market, Income, Cost
• IVS 104 — Data and Inputs: observable vs unobservable, aligned to the IFRS 13 hierarchy
• IVS 105 — Valuation Models: requirements for the models used to derive value
• IVS 106 — Documentation and Reporting: what must be retained on file and what must be in the valuation report
• IVS 500 — Financial Instruments: the asset standard for debt and derivative positions

IVS 103 and the Income Approach for private debt

IVS 103 sets out three valuation approaches: Market, Income, and Cost. For private credit, the Income approach — implemented as discounted cashflow — is generally the dominant method and the one that IVS 500 most directly contemplates. The contractual cashflows are projected, adjusted for expected credit loss, and discounted at a rate comprising a risk-free component plus a credit spread. This is the same shape of calculation the platform implements and is broadly aligned with the framework used under IFRS 13 for Level 3 fair value measurement.

The Market approach still has a role, typically as a calibration and corroboration tool. An observed spread on a comparable broadly syndicated loan is rarely transactable evidence for a bilateral unitranche position, but it can serve as a defensible anchor for the credit-spread component of the discount rate. IVS supports the use of observable market data to calibrate unobservable inputs — which is one reason it tends to align with rather than contradict the IFRS 13 Level 2 versus Level 3 debate (see also our piece on the IFRS 13 hierarchy).

IVS 104 and the observability question

IVS 104 governs data and inputs, and it is where the link between IVS and IFRS 13 is most direct. IVS 104 adopts a framing of observable and unobservable inputs that aligns conceptually with the IFRS 13 fair value hierarchy. For a Level 3 private credit position — which is the majority of the population — IVS 104 requires the valuer to document which inputs are unobservable, how they have been derived, and what alternative values were considered. IVS 105 (Valuation Models) and IVS 106 (Documentation and Reporting) then govern, respectively, the model itself and the file that supports the conclusion.

The 2025 edition of IVS tightened documentation and modelling expectations in this area, with a dedicated chapter on Valuation Models (IVS 105) that did not exist as a standalone General Standard in the 2022 edition. For private credit managers this is not a new direction so much as a confirmation of the direction that auditors and regulators have been pushing for several years.

The awkward fit of "highest and best use"

IVS imports the concept of "highest and best use" from real property valuation, where it is central to IVS 400. The principle is that the value of an asset should reflect the use that is physically possible, legally permissible, financially feasible, and that results in the highest value. For a commercial building this is analytically tractable. For a senior secured term loan, it is not.

IVS 500 handles this by recognising that the concept does not translate cleanly to financial instruments. A debt instrument's value is driven by contractual cashflows, credit risk, and the discount rate applied to them; the "use" of the instrument is essentially fixed by the contract. The practical effect for private credit valuation is that the highest-and-best-use reasoning that anchors real property valuation under IVS is effectively inert — what matters is the IVS 500 guidance on expected cashflows, credit adjustment, and discount rate determination.

Perspectives Papers and the supervisory conversation

Alongside the IVS themselves, the IVSC publishes Perspectives Papers. These are not standards and carry no direct compliance force, but they represent the Council's view on emerging technical questions and are frequently cited by auditors and regulators. The IVSC publications page lists current and historical Perspectives Papers; readers citing a specific paper should refer to it directly rather than relying on a paraphrase, as titles, dates and authorship are subject to change between editions.

IVS is also referenced by some regulators. The European Banking Authority cites IVS for certain collateral valuations in its guidelines, and a number of national supervisors recognise IVS as an acceptable framework for independent valuation work. For private credit managers, this can mean that a valuation policy anchored in IVS is easier to discuss with both auditors (who are looking for IFRS 13 compliance) and regulators (who are looking for a recognised international framework). The two sets of standards are intended to be complementary rather than competing.

What "IVS-compliant" actually requires

The phrase "IVS-compliant valuation" is used loosely in offering documents. Under the 2025 edition, a disciplined reading points to several elements: a framework and engagement scope consistent with IVS 100 and IVS 101; an appropriate basis of value under IVS 102; methodology consistent with IVS 103; input treatment consistent with IVS 104; a model that meets IVS 105; documentation and reporting in line with IVS 106; and, for private credit specifically, the financial-instrument-specific guidance in IVS 500. A valuation platform that produces reproducible, versioned, sensitivity-tested output with documented input lineage is well placed to support these requirements — though formal IVS compliance ultimately rests on the valuer's engagement, judgement and report rather than on tooling alone.