Senior Vice President Subu Parmeswaran, CFA was published in Private Funds CFO. His piece, “The Evolving Nature of Direct Secondaries Valuations,” examines the rise of secondary markets and the considerations required when using transaction data to value private company equity.

Parmeswaran explains three key points:

• Valuing private company equity under ASC 820 is challenging due to the absence of observable market prices, making fair value assessments more complex than for publicly traded firms.
• Liquidity pathways such as IPOs, M&A, and secondary transactions continue to evolve, with extended private company lifecycles increasing uncertainty around exit timing and investor return expectations.
• Pricing in secondary markets varies widely, with premiums influenced by scarcity and strategic demand, and discounts driven by liquidity pressure, information gaps, and stock class differences.

Secondary transactions used for valuation must always consider the principal market, market participant assumptions, and transaction quality for fair value accounting.