A Price Ages With the Evidence Behind It
A private mark becomes stale when the last round no longer supports it. Time may have passed, the business may have changed or the market may have moved. Keeping the same value needs current evidence, even if the company has not raised another round.
The IPEV Valuation Guidelines provide best-practice recommendations for fair-value reporting in private capital. Their practical implication is that the manager needs a current valuation process, even when the best-known price is old. IPEV's 2025 edition superseded the 2022 guidelines.
The question becomes material when the mark influences a re-up or an LP's allocation limit. Depending on fund terms, it may affect reported performance and economics too. The assumptions behind the old price carry the valuation; a newer date supplies no new evidence.
Valuations Between Financing Rounds
Company developments since the round help explain whether the price still holds. Did revenue and margins develop as expected? Has cash lasted longer than planned, or is the next financing approaching sooner?
Outside evidence adds context. Public values may have moved, and a recent secondary sale may reveal what buyers will pay. Share terms can also explain price differences: stronger rights may protect a new investor without preserving the value of older shares.
Even the lack of a financing requires interpretation. A strong company may have no need to raise. A weaker one may be delaying a round because the old valuation is no longer available.
Evidence Beyond the Age of the Mark
| Evidence | What it can show | Caution |
|---|---|---|
| Company performance | Revenue, margin, retention, and cash progress since the round | Growth without cash efficiency may not support the same multiple |
| Public comparisons | How market valuation multiples have moved | Private company size, growth, and liquidity differ |
| Secondary trades | Real buyer and seller price discovery | Share class, size, and seller pressure may affect price |
| New financing terms | Current investor appetite | Structured protection can hide a lower common-equity value |
| Cash runway | How soon the company must return to market | A long runway can delay price discovery without removing risk |
New Share Rights Can Change the Value of Older Shares
A company can announce a flat round and still change the economics. The new investor may receive a senior preference or downside protection that earlier shareholders do not have.
The proceeds waterfall shows how the two securities behave at different exit values. If the latest security captures more of a modest sale, the older shares may be worth less even when the headline price is unchanged.
Consistent Triggers for a Valuation Review
A policy works best when the trigger is known in advance. The passage of time may require a review. So may a missed budget, a major customer change, or management turnover. A financing plan and a sharp move in public comparisons are equally useful triggers.
Uneven review rules can lead to quick write-ups for strong firms while weak ones stay at old prices. The trigger for each review and the evidence used help LPs understand how the manager reached the new value.
What Valuation Reporting Explains
- Last financing: Its date and terms give context beyond the headline valuation.
- Current operating evidence: Performance since the round and remaining runway.
- Valuation method: Recent transaction, market comparison, discounted cash flow, or another method.
- Sensitivity: What happens when the key assumptions change.
- Governance: Who reviewed and approved the mark.
The last round can remain the best available data point after this review. What matters is that the manager reached that conclusion using current evidence.
Age Changes the Burden of Proof
A mark set 24 months ago needs closer review than one set last quarter. That is especially true if the firm missed its plan or market prices changed.
An older valuation therefore needs more current evidence behind it. Age triggers a retest of the mark; the evidence decides whether it is wrong.
IPEV's 2025 guidelines support reporting private-capital investments at fair value, which depends on current evidence.
Company and Market Signals Together
Suppose revenue multiples for similar public firms fall from 10x to 6x. The private company also misses its plan. Keeping the old mark without review could overstate the value still held.
Neither signal settles the valuation on its own. When both move against the company, mechanically carrying the old mark becomes much harder to defend.
Time since the last round, company performance, market conditions and transaction evidence all help explain whether a mark remains relevant.
Stale Mark Review Model
Time and changes in company or market evidence can weaken the case for an old mark.
View model data and assumptions
| Treatment | Common evidence | Valuation question |
|---|---|---|
| Unchanged mark | Recent financing and on-plan execution | Is last round still fair evidence? |
| Revised estimate | Mixed performance or market repricing | How much does each input affect the estimate? |
| Lower mark | Missed plan or distressed financing risk | Is the old mark stale? |
What Drives the Mark?
A mark may depend mainly on ownership, price or an assumed exit. Further financing can change the stake through dilution, while available reserves determine whether the fund can take part.
The LP can then carry the company case into the fund model. Fees and carry affect the net outcome, while follow-ons and the rest of the portfolio determine whether the position can truly change the fund's result.
Frequently Asked Questions
Is the last round always fair value?
A recent arm's-length round can provide strong evidence of fair value, but that evidence grows stale as the company and market change.
Should funds disclose valuation uncertainty?
A recent round, a model, public peers or manager judgment may support the value. Clear assumptions reveal how much the estimate depends on judgment rather than a transaction price.