In this note, our analysts explore how to value closed-end, private capital funds as a step toward valuing alternative asset managers. The note discusses the assumptions needed to value a fund and gives insight on what is realistic to assume. Our analysts then dive into a proprietary fund valuation model they built based off of historical cash flows. The fund valuation model can account for different time horizons, return assumptions, discount rates and more. This tool can also help investors back into market expectations when GPs close a new fund. Additionally, the output shows investors the return source (i.e. from management fees or carry) depending on user-generated assumptions.
If you are a PitchBook client and would like the analyst team to perform an analysis using this tool with custom inputs and assumptions, please reach out to your account manager.