Part 10/17:
Moreover, the reliance on unrealized gains and mark-to-model valuations creates an illusion of stability and prosperity, masking underlying vulnerabilities. The practice of using secondary sales and "refinancing" as a proxy for exit success inflates apparent gains. Recent data reveal that nearly 30% of firms in private equity portfolios are dealing with liquidity issues, often stretching their valuation just enough to appear profitable without underlying real cash flow.