🚫 Valuation Myth #2: “Last Price per Share = Fair Value”

In Part 1 of our mini-series, we showed why cost ≠ fair value. Now let’s tackle another shortcut: using the last price per share (LPPS) from the most recent round as fair value.

Why LPPS Misleads

• It’s just one round - not all the rounds.

• It ignores preferences and protections baked into that round and other rounds

• It treats all shares like common shares, which they’re not.

• It ignores upside potential across the cap table.

• At the end of the day, it’s simply the cost of the latest round - and cost is not fair value.

What Standards Say

Both IPEV and ASC 820 are clear: last round price can be a useful input, but it must be calibrated for:

• Company performance since the round

• Market conditions and comparables

• Rights and preferences across share classes

The Risks of Relying on LPPS

• Misleading reporting 📊

• Compliance gaps ⚖️

• Trust erosion 🤝

• Exit surprises 💸

👉 Last price per share reflects one deal, in the past. 👉 Fair value reflects what your holdings are worth today.

That’s why global standards push us toward fair value, it’s the clearest picture of where things stand now.