CHAPTER 5

Valuation Techniques, Methodologies, and Standards

Valuation is one of the areas that Limited Partners (LPs) tend to focus their efforts on during the operational due diligence process. Understanding and diagnosing operational risk in the valuation process is certainly an area that may be fraught with considerable operational risks. Investors who take care to appropriately understand not only the valuation methodologies employed by a particular private equity fund but also the ways in which such theories are put into practice will also likely gain insights into other areas of a firm's operational risk exposures. This further highlights the central area of private equity fund valuation, as many other operational functions may be affected in addition to fund marks such as reporting, informat....