TVPI

Worked example

A worked example of TVPI overstating realized performance (illustrative figures):

1. A fund invested $50 million total. Its GP currently marks the remaining portfolio at $80 million in NAV, and the fund has distributed $10 million in cash to date from one early exit.
2. TVPI = ($10M distributed + $80M remaining NAV) ÷ $50M invested = 1.8x — a strong-looking multiple on paper.
3. But because only $10 million has actually been distributed, an LP holding this stake who needs liquidity is sitting on mostly unrealized value, dependent on the GP's own marks and on future exits actually happening at or above those marks.
4. A secondary buyer evaluating this stake discounts the $80 million NAV to account for exactly that uncertainty — the gap between a 1.8x TVPI and the DPI of just 0.2x is the central risk they're pricing.