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valuation-updater skill

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/plugins/babysitter/skills/babysit/process/specializations/domains/business/venture-capital/skills/valuation-updater

This skill helps you mark portfolio positions to fair value per ASC 820 and IPEV guidelines, ensuring consistent, supportable valuations.

npx playbooks add skill a5c-ai/babysitter --skill valuation-updater

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SKILL.md

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---
name: valuation-updater
description: Marks portfolio positions to fair value per ASC 820/IPEV guidelines
allowed-tools:
  - Read
  - Write
  - Glob
  - Grep
  - Bash
  - WebFetch
metadata:
  specialization: venture-capital
  domain: business
  skill-id: vc-skill-035
---

# Valuation Updater

## Overview

The Valuation Updater skill supports periodic marking of portfolio positions to fair value in accordance with ASC 820 and IPEV guidelines. It ensures consistent, defensible valuations for fund reporting and LP communications.

## Capabilities

### Fair Value Assessment
- Assess fair value using multiple approaches
- Apply appropriate valuation methodologies
- Document valuation rationale
- Support valuation committee process

### Methodology Application
- Apply market approach (comparables, transactions)
- Apply income approach (DCF where appropriate)
- Use calibration from recent rounds
- Handle convertible instrument valuations

### Documentation Generation
- Generate valuation memos
- Document key assumptions
- Support audit requirements
- Maintain valuation audit trail

### Portfolio-Level Review
- Aggregate portfolio valuations
- Calculate NAV impacts
- Track valuation changes over time
- Identify outliers for review

## Usage

### Update Company Valuation
```
Input: Company data, recent developments
Process: Apply valuation methodology
Output: Fair value estimate, documentation
```

### Apply Calibration
```
Input: Recent transaction, prior valuation
Process: Calibrate to new price point
Output: Calibrated valuation, back-test
```

### Generate Valuation Memo
```
Input: Valuation analysis, assumptions
Process: Create documentation
Output: Valuation memo for audit/committee
```

### Review Portfolio Valuations
```
Input: Portfolio-wide valuation data
Process: Aggregate, identify issues
Output: Portfolio valuation summary
```

## Valuation Hierarchy

| Level | Inputs | Approach |
|-------|--------|----------|
| Level 1 | Quoted prices | Public market prices |
| Level 2 | Observable inputs | Comparable transactions |
| Level 3 | Unobservable inputs | DCF, option pricing |

## Integration Points

- **Quarterly Portfolio Reporting**: Valuation for reporting
- **Waterfall Calculator**: Values for distributions
- **KPI Aggregator**: Company data for valuation
- **Fund Accountant (Agent)**: Support accounting

## Valuation Methodologies

| Method | Application |
|--------|-------------|
| Calibration | Recent rounds, secondary transactions |
| Market Multiples | Comparable company/transaction |
| DCF | Cash flow positive companies |
| Option Pricing | Early stage, convertibles |
| Milestone | Pre-revenue companies |

## Best Practices

1. Follow ASC 820 and IPEV guidance
2. Use calibration as primary method where applicable
3. Document all significant assumptions
4. Maintain consistent methodology application
5. Support audit with complete documentation

Overview

This skill marks portfolio positions to fair value following ASC 820 and IPEV guidance. It delivers consistent, defensible valuations and supporting documentation to satisfy fund reporting, audit, and valuation committee needs. It is built to integrate into portfolio reporting and accounting workflows for repeatable, auditable outputs.

How this skill works

The skill ingests company and portfolio data, recent transactions, and observable market inputs, then selects an appropriate valuation methodology (market, income, calibration, option pricing, or milestone). It produces fair value estimates, a valuation memo with key assumptions, and an audit trail. Portfolio-level aggregation, NAV impact calculations, and outlier detection are included for review and committee workflows.

When to use it

Quarterly or periodic marking of portfolio positions for reporting
After a new financing, secondary transaction, or material company event
When preparing valuation memos for audits or valuation committee review
To calibrate prior valuations to recent market or transaction data
Before waterfall calculations or distribution modeling that require updated values

Best practices

Follow ASC 820 and IPEV hierarchy: prioritize Level 1, then Level 2, then Level 3 inputs
Use calibration to recent rounds or secondary transactions when available
Document all significant assumptions and the rationale behind method selection
Maintain consistent methodology application across similar companies and instruments
Retain full valuation audit trails and memos to support internal and external review

Example use cases

Update a startup valuation after a new priced round using calibration and generate a memo for the committee
Value convertible instruments with option-pricing models and document the conversion assumptions
Aggregate portfolio marks to calculate NAV impact and flag outliers for deeper review
Apply DCF for cash-flow-positive companies and market multiples for later-stage comparables
Support fund accountants and downstream waterfall tools with defensible, auditable inputs

FAQ

Which valuation method should I pick when multiple inputs exist?

Follow the hierarchy: prefer observable prices (Level 1), then comparable transactions/market inputs (Level 2), and use Level 3 models like DCF or option pricing only when observable inputs are lacking or insufficient.

How are convertible securities handled?

Convertibles are evaluated with option-pricing or scenario-based models, calibrated to recent rounds and documented assumptions about conversion mechanics and dilution effects.