Private-Market Valuation Markups
Definition
Increases in reported private-asset value based on financing rounds, internal models, appraisals, comparable-company multiples, or manager judgment. Markups may reflect real value creation, but they are not the same as a cash exit or executable secondary-market bid.
Why it matters
Private-market marks affect NAV, fees, performance reporting, and investor psychology. If marks lag public comparables or ignore secondary discounts, reported performance can overstate realizable value. Investors should distinguish accounting marks from transaction prices.
Common misconceptions
- •A valuation markup is not a realized gain.
- •The latest preferred financing round may not equal the value of common shares or SPV interests.
- •Manager-estimated NAV can be reasonable and still differ from what a buyer will pay today.
Technical details
Diligence questions
Ask what valuation policy is used, how often marks update, whether public comparables are incorporated, how liquidation preferences are treated, whether third-party valuation agents are involved, and whether any secondary transactions validate the mark.