PE Quarterly Valuations - Whatever You Like?

For the buyout (or growth) guys/girls out there – how aggressive are your quarterly equity valuation marks?

I ask because it is a tacit part of being an associate at my fund that we fully support the often not-so objective valuation marks that our managing partner(s) asks of us. Exhibit A: one of our funds is underperforming (no bankruptcies, etc, just sideways in aggregate EBITDA) but we continue to raise our marks, via either DCF assumptions (so flexible!) or BS add-backs and precedent comp additions. We have obviously also realized the benefit in the public equity market run-up in our public comp methodology. I could confidently say that our portfolio is worth only 70-80% of what it is currently marked at to our LPs.

How, you ask, do we approach end of year auditing? Our auditors can, as I’m sure yours can as well, easily be convinced to accept our marks with minimal elaboration. In fact, we often strongarm our valuation firm (at end of year) to raise their valuation range in advance of our audits.

Am I completely off here? Does everyone do this? I was explicitly told last week that we need to raise the mark on one investment as several others in the same fund are trending lower. I would certainly imagine there is an incentive to behave this way before/during fundraising (though we are not doing so).

Thanks!