Mark To Market - MTM

Google was private for a lonnnnng time before going public. Public mutual funds bought shares of the company when it was private. The company did a few later stage B, C, and D rounds before going public in 2004.

And each time, those subsequent rounds valued the company more highly. So a mutual fund that invested, say, $20 million in the B round... would have seen the C round done at double the valuation.

Well, that mutual fund would then mark to market, or mark up their 20 mil investment to now be worth 40 mil, even though the stock of GOOG wasn’t yet publicly traded.

Then along came the D round, which was done at triple the valuation of the C round, so then those shares of GOOG would have to again be marked up, or marked to the new current market valuation, which was three times the previous round’s valuation of $40M, aka $120M today.

Eventually, the company did go public, and there was no longer need to mark its value to the market, because the market valued it basically every second of the trading day.

If you want to learn more about all this stuff, you can, uh…just Google it.