Forbes investor doesn’t think it’s worth $400 million

November 19, 2013, 1:56 AM UTC

FORTUNE — Private equity firm Elevation Partners is on the verge of salvaging its 2006 investment in Forbes Media, via a sale process that reportedly could garner bids of $400 million. But, privately, Elevation doesn’t believe the company is worth anywhere near that bounty.

Fortune has learned that Elevation is currently carrying its minority stake in Forbes Media at an 80% discount, meaning that the entire company would be worth around $120 million. And this is actually a slight improvement from around a 90% write-down back in 2010.

To be sure, private valuations are rarely perfect. And Elevation’s fiduciary duty is to get the best price it can, regardless of its quarterly reports to limited partners. But the firm also is legally required to mark its investment to market, which leaves us with three possibilities:

  1. 1. Elevation was much too conservative in its judgment. No real harm done, unless you were an Elevation investor who sold units on the secondary market based on the firm’s reported net asset value (NAV). In that case, you may have gotten burned.
  2. 2. Elevation is on point, and the $400 million figure is a banker-sponsored pipe-dream.
  3. 3. Elevation was right in theory, but some profligate buyer has emerged (and, possibly, has prompted others to overvalue the asset).

As we’ve previously reported, Elevation structured its original $264 million investment as preferred stock, which means it would get its principle repaid before any other Forbes shareholders see a dime.

Sign up for Dan Primack’s daily email newsletter on deals and deal-makers: