Carrying Value Of A Private Equity Fund
Hi everyone,
Newbie question, but indulge me please.
How does one go about calculating the carrying value/book value of a private equity fund?
Is it based on the expected return of the fund's companies at the exit? Or is it strictly how much money one has put in?
How does leverage play into the carrying value? Do I just subtract all the debt that the companies have incurred from the assets? For example
if a pe fund has
Company A:
Assets : 600m
Debt:400m (post LBO)
Equity: 200m
Company B:
Assets : 200m
Debt : 150m
Equity:50m
What would the carrying value be? Would this information be sufficient? or would I need the IRR, EBITDA, Exit Multiple Etc.?
Thank you!
We do ours based on the estimated fair market value of our equity at each quarter. We look at DCF, Comps, etc. and estimate an exit multiple, apply it to EBITDA, and then calculate the value of the equity. We then multiply the equity value by our % ownership and ta-da, we have a value for our investment.
Hmm,
Thanks. I guess I was thinking of carry as in the accounting carrying value sense, not how you gentlemen described it.
Thank you for the clarification :P
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