Portfolio Valuation Services, Financial Sponsors

July 1, 2025

Portfolio Valuation: Private Equity and Credit

Fall 2025

Executive Summary

The recent Paramount-Rith Capital transaction highlights a growing challenge in private markets—valuations that fail to reflect market reality. As continuation funds become more common, conflicts arise when general partners act as both buyer and seller. Independent fairness opinions have become essential, ensuring transparency, validating valuations, and reinforcing fiduciary duties. In an environment of deep NAV discounts, these opinions are not formalities—they are vital checks that uphold integrity and trust in private market governance.

FEATURE ARTICLE

Third-Party Fairness Opinions in Continuation Funds: Bridging the Gap of Deep NAV Discounts

Also in This Issue

Updated Metrics for

  • Private Credit and Equity

  • Publicly Traded Private Credit

  • Venture Capital

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Author
Jeff K. Davis
Managing Director
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Public Prices, Private Marks: What BDC Discounts Are Signaling
Public Prices, Private Marks: What BDC Discounts Are Signaling
Publicly traded BDC discounts are signaling a disconnect between private credit valuations and market-based pricing, raising questions about whether private NAV marks are overstated or simply lagging reality. The failed Blue Owl transaction and rising secondary market activity highlight investor demand for liquidity and skepticism toward “sticky” valuations, as public markets imply meaningful discounts to stated NAVs. While these discounts reflect factors beyond asset values, such as leverage, fees, and sentiment, they still provide a real-time benchmark that valuation professionals cannot ignore. Absent a rebound in BDC prices, persistent gaps between public prices and NAVs indicate that NAVs are too high for public BDCs and private BDCs to the extent private BDCs hold similar loans.
Private Equity Marks Trends Spring 2026
Portfolio Valuation: Private Equity and Credit

Spring 2026

Publicly traded BDC discounts are signaling a disconnect between private credit valuations and market-based pricing, raising questions about whether private NAV marks are overstated or simply lagging reality. The failed Blue Owl transaction and rising secondary market activity highlight investor demand for liquidity and skepticism toward “sticky” valuations, as public markets imply meaningful discounts to stated NAVs. While these discounts reflect factors beyond asset values, such as leverage, fees, and sentiment, they still provide a real-time benchmark that valuation professionals cannot ignore. Absent a rebound in BDC prices, persistent gaps between public prices and NAVs indicate that NAVs are too high for public BDCs and private BDCs to the extent private BDCs hold similar loans.
Insurance Valuation Services for Financial Sponsors
Insurance Valuation Services for Financial Sponsors
In recent years, financial sponsors such as private equity, venture capital firms, investment companies, and family offices have taken a more prominent role in funding and growing firms in the insurance industry. From insurance brokerage/distribution to underwriting to InsurTech start-ups, there are many opportunities for investment in the insurance sector and transaction activity in the space has steadily been increasing.Mercer Capital has worked with financial sponsors in the insurance industry for years and we understand both the dynamics of the industry as well as the accounting and valuation issues that are likely to be encountered.Key areas where Mercer Capital can help include:Valuations of Shares/Units for 409A / ASC 718 Compliance – If you anticipate granting equity to founders or key management at acquired companies, using rollover equity as part of a growth strategy, or issuing options or RSUs as part of your employee compensation plans, supportable and defensible valuations are critically important.Valuations for Financial Reporting – Acquisitive growth strategies will likely necessitate ASC 805 purchase price allocations, earn-out liability measurements, and goodwill impairment testing.Financial Due Diligence – We provide financial due diligence and quality of earnings reports on target companies, including analysis/trending of the pro forma P&L, potential earnings adjustments, working capital assessments, unit economics analysis, and other areas of financial analysis.Financial Opinions (Fairness and Solvency Opinions) – Certain types of transactions, related-party issues, or fiduciary concerns can lead a board to seek an independent opinion of fairness or solvency as it pertains to a transaction involving the subject company. These situations might include going-private transactions, special dividends, and leveraged recapitalizations.Portfolio Valuation for ASC 820 Compliance – We provide a range of services to assist fund managers with the preparation and/or review of periodic fair value marks. These services are cost-effective and include a series of established procedures designed to provide both internal and investor confidence in the fair value determinations.To discuss any of these services in confidence, please contact a Mercer Capital professional today.

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