(November 30, 2022) Many managers are repeating the second quarter’s muted adjustments, keeping portfolio marks flat to slightly down despite the S&P 500’s steep drop.
Buyout fund managers appear to have again skipped significant valuation adjustments in their portfolios during the third quarter, deciding to not fully absorb the public markets skid registered in major indexes such as the S&P 500, which was down 24.8% for the year through Sept. 30.
The wider expectation is that buyout shops eventually will have to react, said Daniel Schmidt, CEO at CEPRES, a platform that collects private fund performance data from 6,000 managers and investors and offers advanced analytics and benchmarking tools.
“If the public markets maintain their low [positions], then adjustments are coming,” he said.
A big challenge for managers making valuation calls today is the lack of comparable private markets data, with lower deal volume this year, Schmidt said.
“It’s difficult to measure the valuations because there have been [far fewer] transactions,” he said. “Only those companies that maintained high valuations have sold.”
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