Two related services, one discipline. We prepare fair value measurements under ASC 820 — portfolio marks for fund reporting, and purchase price allocations following a completed acquisition. Both are Level 3 measurements, both are examined by auditors, and both stand or fall on whether the file explains itself.
It is the same standard we apply to proof of cash: every conclusion traceable to the input behind it, every judgment visible rather than buried.
Portfolio marks and the backsolve
A venture or private equity fund holding private companies is measuring Level 3 fair value at every reporting date. The most defensible anchor available is usually a recent arm’s-length financing round in the company itself.
That is what a backsolve does. Rather than building a value from scratch and hoping it lands near the round price, it calibrates: solve for the total equity value that reproduces the price actually paid for the new security, then allocate that value across the capital structure with an option pricing model that respects each class’s liquidation preference, participation rights and conversion terms.
The result is a mark that is anchored to an observable transaction and internally consistent across the cap table — which is exactly what an auditor is looking for. The work then continues between rounds: calibrating forward, documenting what changed, and explaining why a mark moved or did not.
- Backsolve to the most recent round, with the allocation model documented
- Preferred, common and option value derived consistently rather than assumed
- Calibration in later periods, with the drivers of any change stated
- A file that answers the auditor’s questions before they are asked
Purchase price allocation
After an acquisition closes, the consideration transferred has to be allocated to the identifiable assets acquired and liabilities assumed at fair value, with the residual recorded as goodwill. In practice that means identifying and measuring the intangibles the deal actually bought — commonly customer relationships, developed technology, trade names and non-compete agreements — and supporting each measurement with a method the auditor accepts.
Where we tend to add the most value is the connection back to the diligence work. A purchase price allocation built on the same verified financial data that supported the transaction is faster to prepare and considerably easier to defend than one assembled months later from whatever survived the close.
Why measurements get challenged
In our experience it is almost never the method. It is the documentation. The questions that arrive are always the same four: which inputs did you use, why those, how sensitive is the answer, and is this consistent with last period?
A file that answers those in advance converts a review into a confirmation. A file that does not turns every reporting cycle into a negotiation.
Who does the work
Josh Cashman is a Chartered Financial Analyst (CFA) and Accredited Senior Appraiser (ASA) who has spent his career in valuation and M&A advisory, including expert testimony on transaction opinions in state and federal courts. Ron Neufeld is a CPA accredited in business valuation (ABV) with more than thirty years in accounting and transaction advisory services.
Those credentials matter beyond this page. Under SOP 50 10 8.1, effective October 1, 2026, published summaries indicate SBA has removed the $250,000 lender self-valuation tier, so every change of ownership requires an independent Qualified Source valuation.
Scoping
Portfolio marks and purchase price allocations are scoped per engagement rather than sold at a flat rate, because the driver is the complexity of the capital structure and the number of identifiable intangibles rather than the size of the fund or the deal. Get in touch and we will scope it against your reporting calendar.
This page describes services. It is not accounting or valuation advice, and nothing here should be relied upon as a fair value conclusion.