Methodology

How an engagement runs.

Every engagement follows the same sequence. The level of effort scales with portfolio complexity and the auditor’s documentation expectations, but the steps and the order of those steps are constant.

Step 01

Independence and conflict screen

Before scope is signed, every engagement is screened against the firm’s independence register. We confirm no partner has a personal interest in the GP, the LP base, or any portfolio company being marked. We confirm no concurrent advisory relationship exists. The independence file becomes the first workpaper.

Step 02

Scoping and calibration baseline

We document the portfolio, asset class, and reporting framework (ASC 820, IFRS 13, AICPA Guide). We catalogue every available calibration point: entry transaction, observable rounds, exit refinancings, comparable acquisitions. We agree, in writing, what each calibration point is worth in the rolling discount-rate analysis.

Step 03

Methods selection

For each position we select methods appropriate to the asset class — typically a market approach (multiples or transactions), an income approach (DCF or yield analysis), and an allocation method (OPM, PWERM, hybrid) where the capital structure has multiple classes. The auditor’s expected methods are confirmed in advance, never inferred.

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Step 04

Build, sensitivity, triangulate

Models are built from primary data — portfolio company financials, GP’s most recent investment committee memos, third-party data inventories. Each conclusion is sensitivity-tested across the audit firm’s expected ranges. Conclusions that fail to triangulate within tolerance are flagged for partner review before delivery.

Step 05

Internal review

Two-tier review: senior practitioner first, engagement partner second. Reviewers are independent of the build team. Review notes and resolutions are part of the workpaper file. Conclusions are not finalized until both reviewers sign off.

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Step 06

Audit interface

We deliver a workpaper file built to PCAOB AS 2501 standards: methodology memo, calibration log, sensitivity tables, third-party data register, management estimate-overlay reconciliation. Audit-firm valuation specialists are invited to a walkthrough at delivery; subsequent follow-ups are tracked and resolved within agreed-on cycle times.

Step 07

Calibration carry-forward

At each subsequent quarter-end, the calibration baseline is refreshed: new transaction observations, new public-comparable shifts, new credit spread movements. Discount rates are not held constant for narrative reasons — they move when the data moves, and we document why.