---
title: "Valuation Policy | Altss Glossary"
description: "A valuation policy is the documented methodology a manager uses to value assets, especially illiquid holdings, for NAV and reporting."
canonical: "https://altss.com/glossary/valuation-policy"
---

Reporting & Governance

# Valuation Policy

Publisher: Altss LLCPublished 2025-12-31Content modified 2026-01-06

A valuation policy is the documented methodology a manager uses to value assets, especially illiquid holdings, for NAV and reporting.

**Allocator relevance:** **Determines trust in marks—valuation discipline affects TVPI, net returns interpretation, and re-up decisions.**

### Expanded Definition

Valuation policy defines inputs, frequency, governance roles (valuation committee), third-party involvement, and how conflicts are managed. In private markets, valuations are inherently judgment-based, so the process must be consistent, conservative where appropriate, and audit-ready. Changes in valuation policy or inconsistent marks are red flags for allocators.

### How It Works in Practice

Managers mark holdings quarterly using comparables, financing rounds, cash flow models, or third-party appraisals depending on asset type. Policies define when to mark up/down and how to handle stale pricing.

### Decision Authority and Governance

Governance includes valuation committees, audit oversight, and sometimes LPAC involvement when conflicts or subjective marks are material.

### Common Misconceptions

- Valuation is objective because it’s “based on comps.”

- Marks don’t matter until exit.

- Audits guarantee accuracy (audits review process; they don’t set market prices).

### Key Takeaways

- Valuation policy is a trust mechanism.

- Consistency and disclosure matter.

- Marks drive reported performance metrics and behavior.

## Related terms

[NAV (Net Asset Value)](https://altss.com/glossary/nav)[LP Advisory Committee (LPAC)](https://altss.com/glossary/lpac)[Audit](https://altss.com/glossary/audit)[Reporting Package](https://altss.com/glossary/reporting-package)[TVPI (Total Value to Paid-In)](https://altss.com/glossary/tvpi)

[← Back to Glossary](https://altss.com/glossary)

[Previous term

Unitranche](https://altss.com/glossary/unitranche)[Next term

Value Creation](https://altss.com/glossary/value-creation)

## Canonical URL

https://altss.com/glossary/valuation-policy