How To Avoid Portfolio Co. Valuation Risks

By Joshua Newville, Timothy Mungovan and Anthony Drenzek (July 24, 2017, 12:26 PM EDT) -- For private fund managers, the valuation of privately held securities has been subject to heightened regulatory scrutiny. As the initial public offering on-ramp for private "unicorn" investments has lengthened, fund managers may hold illiquid investments for longer-than-expected time periods — and valuation-related risks increase as the time lengthens between purchase and exit. An earlier article addressed regulatory and litigation concerns regarding valuation of traded securities. Here, we address valuation of private equity portfolio companies....

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