Mark-to-market
Measuring a holding at current fair value under the applicable framework: an orderly-transaction value between market participants at the measurement date. Private assets may require models and current inputs when observable prices are unavailable.
Mark-to-market in practice
Hypothetical: a public comparable’s equity price falls 10% in a week. A private holding’s valuation must assess relevant current evidence, including differences in operations, leverage and liquidity; the comparable’s move does not mechanically reduce the private holding’s value by 10%. No new trade is required to consider that evidence.
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| Issue | Fair value | Cost-based measurement |
|---|---|---|
| Measurement focus | Current market-participant orderly-transaction value | Cost subject to applicable accounting adjustments |
| Updating evidence | Current prices or models and inputs, even without a trade | Impairment, amortization and other framework rules may change carrying value |
| Private holdings | May require fair-value estimates | Not automatically held unchanged at cost between transactions |
Terms Related to Mark-to-market
NAV · Illiquidity discount · Quality of earnings (QofE) · Denominator effect · Dividend yield · All of the glossary