Abstract
Private-market participants need price references, and the absence of exchanges means every reference is constructed. Construction requires method, and method requires disclosure. This primer sets out an input hierarchy for private-company pricing, the adjustments that separate careful references from lazy ones, and the governance that keeps published numbers honest — the framework behind the source-tier labels on our own Price & Data pages.
1. The input hierarchy
Not all pricing evidence is equal, and a methodology’s first duty is to rank it. Completed secondary transactions stand at the top — actual money for actual shares — weighted by recency and size. Live bids and asks come next: real intentions, but intentions that may never meet; a wide spread is itself information. Primary round terms follow — solid evidence, but for preferred stock with rights common shares lack (the classic conflation). 409A appraisals contribute a floor-flavored, tax-purpose view of common. Model outputs — comparables, sector movements, revenue multiples — rank last: indispensable for coverage, never to be dressed up as observation. A published price should declare which tier it stands on; that single disclosure does more for user trust than any accuracy claim.
2. Adjustments that honest references make
Raw inputs need translation. Share-class adjustment: evidence from preferred trades must be discounted through the rights stack before it says anything about common (the waterfall mechanics). Staleness decay: a trade from last week and one from three quarters ago are different species; confidence should decay visibly with age, and a company whose freshest input is ancient should say so rather than flash a precise-looking figure. Size and restriction context: a small clean block and a large encumbered one clear differently. Corporate-event resets: new rounds, tenders, and down rounds (which reprice more than the headline) invalidate older evidence rather than averaging into it.
3. Governance of a published price
Method without governance drifts. The commitments that matter: methodology published before prices, and versioned when it changes; every number dated and source-tiered at the point of display; spreads or ranges shown where the evidence is two-sided, instead of false-precision midpoints; conflicts disclosed — a platform that transacts should say how the pricing function is walled from the trading one; and a correction policy, because constructed numbers will sometimes be wrong and the honest ones say so in public.
4. What users are owed
A reader of any private-market price is owed the answers to four questions without asking: What evidence produced this? How old is it? Which share class does it describe? What would make it change? A platform that answers them — in the interface, not a PDF appendix — has converted a number into information. One that doesn’t has published decoration.
Conclusion
Private-company pricing cannot be made perfect; it can be made honest. Honesty here is structural — hierarchy, adjustment, disclosure, governance — and it is the difference between references that inform a negotiation (indicative, and proudly labeled so) and references that manufacture false confidence at scale.
Educational only. InvestNow is a demonstration platform. This page is general information, not investment, legal, or tax advice, and not an offer or solicitation of any security. Private-market investments are speculative, illiquid, and can lose their entire value. Consult a qualified professional about your circumstances.