Appraisal Economics Inc. has conducted a valuation of an interest in a limited liability company that holds approximately three dozen limited partnership interests in hedge funds and private equity funds, among other illiquid assets. This engagement for a former cabinet-level advisor to the President of the United States was performed for tax planning purposes. Our scope of work included valuing each hedge fund interest and each private equity interest, and marking to market other assets such as an unsecured promissory note due from an individual. Limited partnership interests in hedge funds and private equity funds are generally non-controlling and illiquid, and may require the application of discounts for lack of control and discounts for lack of marketability to determine the fair market value. Selecting credible discounts requires understanding both the economic structure and the legal rights and restrictions of these types of closely held investments.
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