The Global Risks Alliance (GRA)
Private holdings have no quoted price, so their value is estimated by the manager, usually each quarter, from models, comparable companies and recent transactions. Those estimates drive reported performance, fees, fund-level borrowing and limited partners' allocation decisions. This page sets out how fair value is estimated under accounting standards and the IPEV guidelines, where uncertainty and bias enter, how valuation governance is evidenced, and what the evidence serves for the committees, investors and supervisors who rely on the marks.
GRA · Established · service level R0
Private equity valuation is the estimate, usually quarterly and by the manager, of what unlisted holdings are worth, made from models, comparable companies and recent transactions under fair value accounting. These marks drive reported performance, fees and fund-level borrowing, and they are tested only when assets are sold.
For valuation uncertainty, in GRA's spatial-finance reading, the map opens on night lights and population density with built-up and settlement extent from NASA GIBS, framed on the contiguous United States; every other NASA layer, live feed and forecast waits in the layer list.
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NASA GIBS / EOSDIS · ASTER GDEM (METI, NASA) · Blue Marble (NASA) · © OpenStreetMap contributors (ODbL) · Natural Earth
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For valuation uncertainty, in GRA's spatial-finance reading, the map opens on night lights and population density with built-up and settlement extent from NASA GIBS, framed on the contiguous United States; every other NASA layer, live feed and forecast waits in the layer list.Satellite and model products as NASA publishes them, each with its own date; indicators, not assessments of any place; claim ceiling INTEGRATED.
Layers and dates
The working screen behind this subject: its structure, terms and states. Names are placeholders and values illustrative.
Valuation uncertainty · Fund III · Quarter 3
| Company 7, logistics | 6.2 | 11 | High | Watchlist |
| Company 3, healthcare | 3.2 | 21 | Low | On plan |
| Company 5, industrial | 5.1 | 23 | Medium | On plan |
| Company 9, software | 3.0 | 35 | Low | On plan |
Unlisted data and model limits. The dossier below sets out how the risk develops, what is measured, where the data come from, how it is modelled and who decides.
Most private holdings are Level 3 assets under IFRS 13 and ASC 820, valued with unobservable inputs. A small change in a chosen multiple or discount rate can move value materially, and the choice rests with the valuer.
Quarterly marks based on lagged earnings and selected comparables move less than public markets. Reported volatility and correlation then understate economic risk, which feeds into allocation models and the denominator effect at limited partners.
Marks influence fundraising, carried interest, NAV-based borrowing and continuation-vehicle pricing. Independent valuation functions and committees exist because the party marking the asset benefits from the mark.
The gap between the last mark and the realised exit price is the clearest evidence of valuation quality, but realisations are selective: the assets sold first may be those whose marks are easiest to confirm.
Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.
| Term | Definition |
|---|---|
| Level 3 asset | An asset valued with significant unobservable inputs under the IFRS 13 and ASC 820 fair value hierarchy. |
| Denominator effect | An investor's private asset share rising above target when public assets fall faster than private marks. |
| Valuation smoothing | The tendency of appraisal-based marks to move less and later than market prices. |
Each indicator carries its unit, its cadence, the kind of source behind it and the evidence label a value would carry. No values are shown: a programme supplies them under its own authority.
| Indicator | Unit | Cadence | Source type | Label |
|---|---|---|---|---|
| Exit value relative to prior mark | ratio of realised value to last reported value | per exit | Fund reporting, transaction records | REPORTED |
| Level 3 share of fund assets | percent of NAV | quarterly | Audited financial statements, Form PF | REPORTED |
| Valuation technique mix | share of NAV, by technique | quarterly | Valuation policy reporting | DECLARED |
| External valuation coverage | share of NAV reviewed by an independent valuer | annual | Valuation committee records | REPORTED |
| Sensitivity to key unobservable inputs | change in value per unit change in input | annual | IFRS 13 sensitivity disclosures | REPORTED |
| Secondary market pricing | price as percent of NAV, by strategy | semi-annual | Secondary intermediary reports | ESTIMATED |
| Holding period of unrealised assets | years since acquisition | quarterly | Fund reporting | REPORTED |
The topic as a computational graph: named sources feed the methods, an evidence review gates the outputs, and the decisions stay with the authorities that hold them.
Fig. 02Nodes carry their type, two metric rows and a state; connectors show what feeds what; dashed frames name the owners; the timeline is the cadence. Design of the pipeline, not a record of a run.
Named public datasets and institutional records, each with its licence class. Sources by agreement are used only under their terms and never republished.
| Source | What it gives | Licence class |
|---|---|---|
| SEC Form PF private fund statistics | Aggregated asset values and fair value hierarchy of private funds | Public domain (US government work) |
| Listed private equity companies' annual reports | Published NAV, valuation policies, sensitivities and discounts to NAV | Public reports, terms of use |
| FCA multi-firm review of private market valuation practices | Supervisory observations on valuation governance, conflicts and processes | Free, terms of use |
| IOSCO reports on private finance and investment fund valuation | International supervisory analysis of valuation risks | Free, attribution |
| MSCI Private Capital (formerly Burgiss) cash-flow data | Fund cash flows and NAVs sourced from limited partners | Proprietary, licensed subscription |
| Preqin and PitchBook performance data | Fund-level returns, multiples and NAV histories | Proprietary, licensed subscription |
| Secondary intermediary market reports | Bid pricing relative to NAV and transaction volume by strategy | Public summaries, terms of use |
Private Equity Nexus prepares evidence. The decisions below are taken by the authorities named, under their own rules, and never by the platform.
| Who decides | The question | Evidence this page serves |
|---|---|---|
| General partner valuation committees | Which technique, inputs and calibration fairly reflect value this quarter | IPEV-aligned technique guidance; sensitivity designs; realisation backtests |
| Auditors | Whether fair value estimates are supported and disclosures adequate | Fair value hierarchy, input sensitivity and governance evidence |
| Limited partner investment committees | How far to rely on reported NAV in allocation, pacing and secondary decisions | Mark-to-realisation evidence, secondary pricing and smoothing effects |
| Securities regulators and NAV lenders | Whether valuation processes are independent and robust enough for supervision or lending | Governance checklists and supervisory review findings |
Uncertainty in private valuation is structural, not a sign of bad practice. Where there is no market price, every value is an estimate, and different reasonable estimates can differ materially.
Without trading prices, values depend on models, comparables and assumptions.
Valuations updated periodically with judgement tend to move more slowly than public markets.
Managers value their own portfolios, which creates potential conflicts that governance must manage.
Comparing reported values with eventual sale prices. Limits: only sold assets are observed.
Testing how values change with key assumptions, using financial and risk engineering. Limits: depends on knowing which assumptions matter.
Using listed comparables to estimate how private values might move, grounded in financial economics. Limits: private and public companies differ.
Comparing industry guidance and governance of valuation. Limits: practice varies across managers.
The current service level is R0: information and enquiries. An enquiry receives a reference and names the next step; applications, payments, compute allocations and registrations open only when their team, terms and review capacity exist.