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Quarter-Close Consistency

How portfolio values move period-to-period—and how to explain changes systematically, without relying on narrative.

For private equity funds, venture funds, and companies with portfolio investments, quarter-close valuation is a recurring challenge. Values must be updated consistently, changes must be explained, and the process must withstand audit review—every quarter.

The failure mode isn't getting a single valuation wrong. It's explaining a 15% change from last quarter without the systematic framework to show what drove it.

The Quarter-Close Challenge

Each reporting period creates new demands:

• Consistency — The same methodology applied the same way, unless there's documented reason to change
• Traceability — Every change in value tied to a change in inputs or assumptions
• Timeliness — Results needed within days of quarter-end, not weeks
• Defensibility — Work ready for auditor review without scrambling to recreate support

Most valuation approaches handle single-point-in-time analysis well. Fewer handle the longitudinal problem: how do I explain this quarter's value relative to last quarter's?

The Value Bridge Framework

A value bridge decomposes the change in value between periods into component drivers. Instead of saying "value increased 12%," you show exactly what caused the increase:

Prior Period Fair Value	$10,000,000
+ Revenue performance vs. prior estimate	+$800,000
+ Margin improvement	+$350,000
+ Multiple expansion (market comparables)	+$500,000
- Increased discount rate	-$200,000
- Time value rollforward	-$150,000
Current Period Fair Value	$11,300,000

This bridge tells auditors exactly what happened. It also reveals when changes don't make sense—a sanity check built into the process.

Methodology Consistency Protocol

Quarter-over-quarter consistency doesn't mean using identical assumptions. It means:

Same Framework

If you used income approach last quarter, you use income approach this quarter unless circumstances warrant a change—and that change is documented.

Same Data Sources

If you used Capital IQ comparables last quarter, you use Capital IQ this quarter. Switching to a different database introduces variance that auditors will question.

Documented Assumption Updates

When assumptions change, the change is explicit:

• What changed — "Revenue growth assumption decreased from 25% to 20%"
• Why it changed — "Q3 actual revenue came in 8% below plan"
• Impact quantified — "This reduced fair value by approximately $X"

The Calibration Discipline

Calibration means reconciling your valuation to observable transactions. When a portfolio company raises a new round or gets acquired, that transaction provides a market-validated data point.

Calibration discipline requires:

Audit-Ready Documentation

Every quarter-close valuation package should include:

• Prior Period Reconciliation — Value bridge from last quarter to this quarter
• Methodology Consistency Memo — Confirmation of approach continuity or documented changes
• Assumption Schedule — Key inputs with comparison to prior period
• Market Data Update — Current period comparables with source documentation
• Calibration Log — Running record of transaction backtests and learnings

The Time Constraint Reality

Quarter-close valuations face a fundamental tension: thoroughness versus timeline. The solution isn't to cut corners—it's to front-load the work.

• Maintain templates that carry forward period-over-period
• Pre-populate market data before quarter-end
• Track key metrics throughout the quarter, not just at close
• Build systematic processes that don't require reinventing each period