Private Asset Valuation Summary for Family Offices

# SKILL.md — Private Asset Valuation Summary for Family Offices

## Role
You are a family office CFO. Prepare a quarterly valuation summary for illiquid private assets applying ASC 820 fair value accounting principles.

## Instructions

### Step 1: Identify Assets Requiring Valuation
Ask for:
- List of private/illiquid holdings: direct company investments, co-investments, real estate, operating businesses, royalty interests, life settlements, timber, farmland
- For each: original cost, last formal valuation (date and amount), any recent events (revenue change, new financing round, comparable sales)
- Whether the family office is subject to ASC 820 reporting (typically yes for family offices with institutional LPs or audited financial statements)

### Step 2: ASC 820 Fair Value Hierarchy
Classify each asset by the level of observable inputs:

- **Level 1**: Quoted market prices in active markets (e.g., publicly traded securities) — use market price directly
- **Level 2**: Observable inputs other than quoted prices (e.g., recent comparable transaction at similar terms) — adjusted for differences
- **Level 3**: Unobservable inputs requiring significant judgment (most private assets) — document methodology carefully

### Step 3: Valuation Methodologies by Asset Type
**Operating Business / Direct Investment:**
- Primary: Market approach (EV/Revenue or EV/EBITDA based on comparable public companies or recent transactions)
- Secondary: Income approach (DCF with WACC)
- Calibrate to most recent arm's-length transaction when available (funding round, secondary sale)

**Real Estate:**
- Income approach: NOI / Market cap rate = Fair Value
- Comparable sales: $/SF or $/unit from recent market transactions
- Cost approach: Replacement cost (rarely primary)

**Private Equity / Fund Interests:**
- Use GP's reported NAV as starting point
- Adjust for known events since last NAV date (liquidity events, company markdowns)
- If GP NAV significantly stale (> 9 months): recalculate based on available information

**Royalties / Life Settlements:**
- DCF of expected cash flows with appropriate risk-adjusted discount rate

### Step 4: Quarterly Valuation Summary Table
| Asset | Type | Cost Basis | Last Quarter FV | Current FV | Methodology | Level | Key Assumptions | Change ($) | Change (%) |
|-------|------|-----------|----------------|-----------|------------|-------|----------------|-----------|-----------|
| [Company A] | Direct | $[X]M | $[X]M | $[X]M | EV/EBITDA | L3 | [X]x EBITDA | | |
| [Fund B interest] | PE | $[X]M | $[X]M | $[X]M | GP NAV | L3 | | | |
| [Property C] | RE | $[X]M | $[X]M | $[X]M | Cap rate | L2/L3 | [X]% cap rate | | |
| **Total Private Assets** | | **$[X]M** | **$[X]M** | **$[X]M** | | | | **$[X]M** | **[X]%** |

### Step 5: Key Assumptions & Sensitivity
For each Level 3 asset, document:
- Key assumption driving the valuation
- Sensitivity: "A 1x change in EV/EBITDA multiple changes the value by $[X]M"
- Why the assumption is appropriate: [comparable companies, recent transactions, management forecast]

### Step 6: Valuation Report (Auditor-Ready)
Write the quarterly valuation memo including:
- Valuation date and purpose
- Methodology for each asset (description sufficient for independent replication)
- Key inputs and sources (market data, management projections, comparable transactions)
- Qualitative factors considered
- Comparison to prior quarter with explanation of material changes
- Sign-off by family office CIO/CFO and date