Why MSCI’s PM Insights Acquisition Matters for Private Market Valuation

The assumption that private companies can be reliably valued through reference to their public-market peers is breaking down at exactly the moment a market-derived alternative is becoming viable. That structural shift – more than the transaction itself – is what makes MSCI’s acquisition of PM Insights, announced six weeks ago, worth paying attention to.

A Correlation Breakdown

The breakdown is most obvious where the comparisons should be tightest. Snowflake and Databricks – both at roughly $5bn in annualised revenue, both positioning around enterprise data and AI – now trade at materially different multiples, with Databricks at around 25 times run-rate revenue against Snowflake’s 9 to 12 times. In defence technology the gap is wider still, with SpaceX and Anduril valued at multiples an order of magnitude above Boeing and Raytheon.

From Model-Based to Market-Derived

For institutional holders of private positions, this is not an abstract problem. ASC 820 – the US fair value measurement standard – requires fund managers, banks and insurers to classify private holdings as Level 3 when valuation inputs are unobservable, which in practice means model-based. Those models lean heavily on public-market comparables, last-round valuations and discounted cash flows. When the public comparables stop tracking, the model loses its anchor, and the subjectivity inherent to Level 3 becomes a structural problem rather than an accounting category.

This is the gap PM Insights has been built to address. Founded in 2021 as ApeVue and rebranded in 2024, the firm aggregates pricing data from a consortium of broker-dealer and bank secondary desks, producing daily composite prices anchored in observable bids, offers and trades rather than model assumptions. The thesis is that this data is sufficient to support reclassification of private holdings from ASC 820 Level 3 to Level 2 – replacing model-based marks with market-derived ones, with material consequences for audit scrutiny, regulatory capital treatment and the disclosure burden on funds.

A Precedent in Asset-Backed Securities

Fusco has done this before. “The most impactful time to have helped support the move from Level 3 to Level 2 was from 2006 to 2010, for the asset-backed security market,” he says. “My co-founder and I were building out mark-to-market asset-backed securities pricing and benchmark solutions at that time. Even though it wasn’t liquid, the move from Level 3 modelling work to a Level 2 market-driven solution shifted the mindset from subjectivity to objectivity.” The ABS precedent is instructive: it shows that the shift can happen in markets that are not continuously liquid, provided the methodology and the contributor base are credible enough to satisfy auditors.

The methodology PM Insights applies to private companies follows the same OTC logic. “The goal, which we’re chasing, is to find the best estimate of mid-market in the absence of distress,” says Fusco. “When we have a substantial amount of bids, offers and trades, this looks like any other OTC-traded asset class – syndicated loans, asset-backed securities, corporate, sovereign or agency bonds.” The decision to keep AI out of the pricing engine is deliberate. “We’ve purposely avoided the use of AI. We’ve taken an econometric approach, as opposed to an AI approach. When you’re talking to an auditor or a pricing committee, they don’t want to work with black box.”

The Long-Tail Question

The argument works cleanly at the top of the market. The $6.4 trillion universe of late-stage private equity that PM Insights tracks is heavily concentrated – SpaceX alone accounts for around $1.5 trillion – and the largest names trade with enough secondary depth to support genuine composite pricing. Fusco’s framework for what lies beneath is three-tier: behemoths priced from direct secondary flow; large names with thinner activity priced from private-market comparables rather than public-market peers whose multiples no longer correlate; and a derived-price methodology for the long tail. Where bespoke Level 3 valuations from independent firms can produce materially different marks across holders of the same security, a single composite price applies uniformly.

What he will not do is overclaim. “We can’t raise our hand and say that’s a Level 2 or a Level 3 – that’s going to be the client to decide.” It is a notable concession in a market where vendor claims about Level 2 eligibility are increasingly common, and it is the position that gives the rest of the argument its credibility.

Asset Level Meets Fund Level

The fit with MSCI is structurally specific. MSCI is not a trading venue, a broker or a secondary marketplace, and the absence of any economic position in private secondaries is what makes the consortium model portable into a larger organisation without disturbing the contributor base. “We are a key piece of the puzzle for MSCI to have proprietary, in-house pricing in private assets,” says Fusco. “Now we have a homegrown solution to work from.” The acquisition also positions PM Insights against MSCI’s existing private markets capability – principally the former Burgiss platform, acquired in 2023. “MSCI Private Assets does a lot at the fund level, and we focus at the asset level,” says Fusco. “So if we can start to bridge the gap between fund-level dynamics and asset-level dynamics, that becomes a much bigger, more holistic picture for MSCI.”

That bridge is the genuinely new piece. Fund-level data – the cash flows, valuations and benchmarks that came with the Burgiss acquisition – has been available for some time, sourced from limited partners and covering thousands of vehicles. Asset-level pricing of the underlying private companies has not, at least not at this institutional scale. Combining the two produces something neither business could offer independently: the ability to look through fund-level performance to the asset-level price discovery that drives it.

What the Data Alone Cannot Settle

Whether the public-comparables era is genuinely over depends on questions the data cannot answer alone – on how Big Four auditors treat composite secondary pricing, on how the PCAOB engages with the resulting marks, and on whether LPs actually want the daily volatility that observable pricing introduces into NAV. But the structural conditions that made Level 3 model-based valuations defensible – correlated public peers, infrequent secondary flow, no credible alternative – are weakening in all three dimensions simultaneously. The acquisition reflects a judgement that the methodology is ready to scale, and that the incumbent approach is no longer fit for purpose.