ASC 820: Portfolio Company Valuations
Portfolio company valuations are a necessary step in running a fund, especially when there are limited partners involved. In our experience, there are benefits for everyone. US GAAP, for one, requires fair value measurement in financial reporting. Limited partners rely upon accurate estimates of value for their illiquid investments. And fund managers gain a third-party perspective on valuations that can assist them in allocation, risk assessment, and the monitoring of their holdings.
The Purpose
Under ASC 820, private equity funds, venture capital funds, hedge funds, pension funds, and other institutional investors are required to periodically report the fair value of their portfolio investments to their investors. These valuations support compliance with US GAAP and ensure transparency in financial reporting.
Although asset managers often have the internal capabilities to perform “mark-to-market” analyses, many funds, investors, and regulators prefer the use of an independent valuation firm to ensure objectivity and avoid potential conflicts of interest.
The Redwood Advantage
At Redwood, we have extensive experience in valuing a wide range of portfolio company securities, including preferred and common equity, convertible debt, options, and complex derivatives. Our team applies technical rigor through an independent lens, backed by a deep understanding of the complexities and requirements of ASC 820.
Our valuations are tailored to the specific characteristics of the investment and the needs of the fund, delivering independent, defensible valuations that withstand scrutiny. Our clients rely on us to enhance transparency, support internal decision-making, and ensure confidence in financial reporting.
Built for complexity and trusted for clarity, Redwood delivers valuation insights that empower confident decision-making and drive growth.
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