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Secondary Sale Analysis for Fund Interests
Send the reported NAV, the position detail and the terms, and get the price restated against everything the buyer actually commits.
A secondary is quoted as a percentage of NAV, and that convention is why the pricing conversation goes wrong. Every calculator and explainer ranking for this query solves the same equation: NAV times a percentage equals price, so 88 percent is a 12 percent discount. That is arithmetic about one number on a capital account statement. It is not arithmetic about the transaction. The buyer commits three separate things, and NAV describes only the first of them.
Marrowbone Partners IV is an invented fund. The interest carries a 10.0m commitment, 7.4m paid in, 2.6m unfunded, and reported NAV of 6.45m at the 31 December 2024 reference date. At 88.0 percent of that reference NAV the price is 5.676m, which is a headline discount of 12.00 percent, or 0.774m in currency. Interim calls of 0.45m and distributions of 0.62m true up at closing, so the cash that actually changes hands is 5.506m.
Against the 30 June 2025 NAV of 6.15m, 5.506m is a 10.47 percent discount rather than 12.00. Add the 2.15m of unfunded the buyer assumes at par and 0.441m of remaining fees, and total committed capital is 8.097m against a stated basis of 8.300m. On that basis the same transaction is a 2.45 percent discount. Move the fee base and it becomes a premium instead. The run states all three and names the document that decides which one holds.
The fee base is worth more than the discount, and the LPA decides it
Remaining fees are the term most often left out and they are not small. Over a 4.5 year remaining term at a 2.0 percent rate, a fee charged on the 10.0m commitment is 0.900m. The same rate on unreturned invested cost, averaging 4.90m across the run-off, is 0.441m. The difference is 0.459m, which is 59.3 percent of the entire 0.774m headline discount. One clause in the partnership agreement decides which of those two numbers is real.
Run both and the sign of the answer changes. On the unreturned-cost base the buyer commits 8.097m against 8.300m of basis, a 2.45 percent discount. On the committed-capital base the buyer commits 8.556m, which is a 3.08 percent premium to the same basis. Nothing about the fund moved between those two figures. A headline of 88 percent of NAV is compatible with both, which is what makes it misleading in both directions rather than only one.
The unfunded leg needs the same treatment, and there is now a standard place to read it. ILPA's capital call and distribution template makes each transaction's impact on unfunded commitment a required field, which is what turns a reconciliation into a document rather than a recollection. And in GP-led deals ILPA asks that the rationale be scrutinised where the existing fund has remaining unfunded capital, for the same reason: unfunded capital is a liability the price has to carry.
How it works
Send the position
Commitment, paid in, unfunded and reported NAV at each date, with the dates stated explicitly.
True up the interim
Calls and distributions between the reference date and closing, each one reconciled to the price.
Price the fee load
Remaining fees on every base the agreement could mean, with the difference stated in currency.
Restate the discount
The same transaction against reference NAV, latest NAV and total committed capital, side by side.
What you get
- The price restated three ways, against reference NAV, latest NAV and total committed capital
- Every interim call and distribution between reference date and closing, trued up line by line
- Remaining fees computed on each base the partnership agreement could plausibly mean
- The unfunded commitment carried at par, with the reconciliation from the reference date
- What the buyer is assuming, stated as terms rather than as a view on the assets
- The clauses and documents that would settle each open input, named individually
Common questions
Does this tell me whether to do the deal?
No. It restates the price onto bases the headline hides and names what the buyer is assuming. It produces no view on the assets, no forecast of what the unfunded will buy and no recommendation to transact. That judgement belongs to whoever is accountable for it, and the restatement is what they should be judging.
Why does the unfunded commitment change the discount so much?
Because it transfers at par and nothing discounts it. On the worked example the buyer takes 2.15m of unfunded alongside 5.506m of cash, so two thirds of the exposure is priced and one third is not. Expressed against total committed capital the 12.00 percent headline becomes 2.45 percent, which is the same deal described honestly.
What if I do not know which fee base the agreement uses?
Then the run prices both and reports the spread rather than picking one. On Marrowbone that spread is 0.459m, or 59.3 percent of the headline discount, which is usually enough to make finding the clause worth an hour. The output names the section of the partnership agreement and the side letters that would settle it.
How is a reference date price different from a closing price?
The percentage is struck on an older NAV and the interim flows are trued up, so the cash at closing is not the quoted figure. Here 5.676m becomes 5.506m after 0.45m of calls and 0.62m of distributions. Against the latest reported NAV that is a 10.47 percent discount rather than the quoted 12.00.
Does it work for a GP-led deal or a continuation fund?
Yes, and the unfunded question gets sharper there, because rolling and cashing out are priced against the same NAV on different terms. ILPA asks for extra scrutiny where the existing fund still has unfunded capital. The run states each election on total committed capital so the two options are comparable rather than merely adjacent.
Where do the marks behind NAV get tested?
Not here. This takes reported NAV as given and prices around it, because a secondary is a transaction analysis rather than a valuation. Where the marks themselves are the question, the valuation methodology pack carries the bridge and the input register, and a 409A and valuation report review reads an appraisal one mark was struck on.
Can I compare this fund's performance to the buyer's alternatives?
Only on a basis that accounts for fund age, which is a separate exercise. Fund performance and benchmark analysis restates IRR, TVPI and DPI to a common number of quarters after first close. On a single position that has already realized, an investment post mortem and attribution bridges the outcome back to what the memo underwrote.
Secondary Sale Analysis for Fund Interests
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