Hey WSO,
I've been doing a bit of research into fund performance across vintages and noticed that many LPs report IRRs for recently raised funds (5 years ago) that have called capital but not yet had any distributions. A quick google search suggested that GPs generally report estimated unrealized NAVs on a quarterly basis, but I couldn't find much detail on how these asset values are calculated.
Historically speaking, are these NAV estimates generally accurate (as measured by actual realized distributions vs prior year estimates)?
Also, would you expect accuracy of NAV estimates to differ by fund type? My hypothesis is that a growth-focused buyout shop would be able to apply their purchase multiple to a growing EBITDA number and therefore show quick appreciation in NAV, but other types of funds that are more focused on other return drivers (multiple expansion / carve-outs, consolidation plays, etc) may have a harder time estimating future sale price.
