Why the evolution of private markets is redefining valuation

Valuation’s expanding role goes well beyond financial reporting. Investor reporting, financing arrangements, continuation vehicles, secondary transactions and portfolio monitoring all depend on timely, consistent and well-governed outputs.

Valuation now connects functions across the organisation. Investment teams use it to assess performance and support decisions; finance teams rely on it for reporting; and investors, auditors and regulators expect transparent methodologies, robust governance and consistent judgement.

Supporting this broader ecosystem requires a wider range of expertise that many firms have historically needed. Private market portfolios increasingly combine private credit, infrastructure and real estate assets, each requiring different market insights, valuation approaches and sector-specific knowledge. Alongside technical expertise, valuation professionals must interpret market developments, assess portfolio company performance and apply judgement where observable inputs are limited.

This does not mean every asset manager requires the same valuation model or level of external support. The more relevant question is how to combine internal ownership with the expertise, capacity, governance and flexibility required as portfolios evolve. Larger managers may have the scale and resources to internally retain significant capabilities, while others may require additional support when entering new asset classes, launching new fund structures or managing periods of increased activity.  As a matter of fact, the focus is shifting from whether valuation should be internal or external to whether the valuation approach provides the right combination of expertise, capacity, governance and flexibility for the asset manager’s specific needs. 

According to our latest ManCo Barometer, 65% of ManCos currently perform valuations in-house, with an average of three full-time employees dedicated to the function. This highlights the need for operating models that can add specialist depth and capacity without requiring permanent headcount across every strategy and reporting peak. These in-house valuation teams were largely designed to support periodic reporting for relatively stable portfolios. But the growth of private markets has changed those operating assumptions. Asset managers are now overseeing a broader mix of asset classes, supporting more frequent valuation events and responding to higher expectations around governance, transparency and scalability.

These evolving demands have transformed valuation into a capability that must scale alongside the business. Asset managers need to maintain consistent valuation policies across multiple strategies, access specialist expertise for increasingly diverse assets and deliver timely, well-governed outcomes across expanding portfolios.

But building this capability is becoming increasingly resource-intensive. Expanding into new sectors or launching new fund structures often requires specialist knowledge that is difficult to maintain across every asset class. Reporting peaks create additional pressure on internal teams, while investors, auditors and regulators continue to expect robust documentation, transparent governance and the consistent application of valuation policies regardless of portfolio size or complexity. For a function typically staffed by three people, this leaves little room to focus on the higher-value oversight and judgement that asset managers increasingly need from their valuation specialists.

This evolution is prompting asset managers to consider whether their existing valuation approach provides the flexibility, expertise and capacity needed to support scalability. The objective is to build an operating model that can support business growth, maintain consistent governance and adapt to increasingly diverse investment strategies without compromising quality.

As a matter of fact, there’s no single model for delivering valuation.  As shown below, 33% of respondents perform valuation entirely in-house, while 43% combine in-house and third-party capabilities, and 24% rely solely on third-party providers.

The appropriate approach will differ between asset managers, but the direction of travel is increasingly clear: valuation capabilities need to be repeatable, defensible and able to scale with the business. Some managers are placing greater emphasis on scalable valuation approach that combine specialist expertise, standardised processes and technology-enabled delivery. Rather than building every capability internally, they are adopting more flexible approaches that provide access to the right expertise when it is needed, strengthen consistency across portfolios and improve resilience during periods of growth or peak reporting activity.

Technology is an important enabler of this evolution, but it is rarely sufficient on its own. Technology-enabled workflows can also improve how teams access data, benchmark assumptions, document judgements and maintain a transparent audit trail across valuation cycles. Automated workflows, centralised data platforms and digital valuation tools can improve efficiency and strengthen control environments, yet they remain dependent on robust governance, technical expertise and professional judgement. Sustainable operating models integrate these capabilities rather than treating them as separate initiatives.

This evolution is also reshaping the role of internal valuation teams. In a co-sourced model, ownership of valuation policies, governance, challenge and final decision-making remains with the asset manager, while external specialists provide flexible execution capacity, technical depth and technology-enabled support. Rather than focusing primarily on the execution of valuation activities, internal resources are increasingly concentrated on oversight, governance, challenge and strategic decision-making. To support this shift, many organisations are redesigning their valuation operating models by complementing internal capabilities with flexible access to external specialist expertise, scalable execution and technology-enabled processes. This approach strengthens organisational resilience while enabling firms to scale without compromising governance or valuation quality. 

Private markets will continue to evolve in scale, diversity and sophistication. New investment strategies, broader investor participation and rising expectations around governance are likely to place even greater demands on valuation capabilities in the years ahead. 

Ultimately, success will depend not only on technical expertise, but on an operating model capable of delivering consistent, high-quality valuation outcomes across increasingly diverse portfolios, reporting cycles and stakeholder expectations.

As valuation requirements continue to evolve, valuation managed services are becoming an increasingly strategic component of modern valuation operating models. By complementing internal capabilities rather than replacing them, they provide organisations with the flexibility, specialist expertise and operational resilience needed to support growth while maintaining consistent governance and valuation quality.