The aggregate finding of our analysis should be reassuring for LPs in buyout. The NAV on a portfolio is, on average, a conservative estimate of realizable value, providing asset owners a useful reference point when assessing portfolio value.
The aggregate, however, masks characteristics that matter in specific situations. Marks are least reliable for aging assets, when LPs face secondary sales or continuation-fund decisions. The performance asymmetry between winners and laggards matters most for pricing transactions, manager selection and portfolio construction. For LPs, understanding these nuances of how reported valuations relate to eventual value is critical.
