VC & PE Glossary
What Is Mark-to-Market?
Updated
Definition
Mark-to-market is valuing assets at current fair value rather than historical cost—standard for fund portfolio reporting and for adjusting holdings to observable market prices.
Useful for: Founders, Investors
Mark-to-market is the practice of measuring assets at their current fair value, updating carrying amounts when market or transaction evidence changes.
How it works
Public securities mark-to-market daily using exchange prices. Private funds mark portfolio companies each reporting period using:
- Recent financing rounds (primary or secondary)
- Comparable public company multiples
- Revenue or EBITDA-based models with discount rates
- Third-party valuation firms for ASC 820 / IFRS fair value
When fair value rises, funds record a mark-up; when it falls, a mark-down. NAV aggregates marked values minus liabilities.
Illiquid startups lack continuous prices, so mark-to-market is judgment-based—governed by valuation policies and LPAC review on contentious calls.
Why it matters
- Founders: A new round is the clearest mark-to-market input. Long gaps without pricing invite GP models that may not match your self-assessment.
- Investors: Mark-to-market NAV drives DPI/TVPI interim metrics. Stale marks distort GP league tables; aggressive marks reveal discipline or optimism.
Common mistake
Thinking mark-to-market applies only after IPO. Private funds mark continuously; public listing just adds a visible ticker to the same concept.
Related ideas
See also mark-down, mark-up, NAV, and 409A valuation.
Related terms
- Mark-Down — Mark-down is lowering the reported carrying value of an investment on a fund's books—typically when a portfolio company's fair value has fallen since the last reporting period.
- NAV — NAV — net asset value — is the estimated value of a fund's portfolio minus liabilities, usually expressed per unit or per limited partner commitment share.
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Common questions
Short answers for founders, LPs, and operators