Valuation of carried interests involves determining the financial value of a share of profits received by fund managers, typically in private equity or hedge funds. These interests are earned once the fund reaches a certain performance threshold, often after exceeding a hurdle rate. The valuation process assesses potential future cash flows, risk factors, and the fund's performance. Due to its complexity, carried interest valuation requires expertise in financial modeling and market analysis. It plays a vital role in investment decision-making, tax reporting, and understanding the true value of a fund manager's compensation. Accurate valuation of carried interests is critical for both investors and fund managers.