It's not that. It really is mark-to-make-believe: Institutional investors want PE managers to ignore declines in public market valuation multiples because if the managers were to value their PE investments at current multiples, the investors would have to write off the value of their PE holdings.

For example, say a PE fund invested in a new EV company a bit over a year ago, at a valuation 10x trailing revenues, and then the fund doubled the valuation of that investment to 20x trailing revenues because Tesla (TSLA) was trading at 20x. All investors happily went along because they could show a +100% gain on this investment by the fund. Now, however, TSLA is trading at 4x trailing revenues, but the fund manager contends that it should ignore a capricious stock market and treat the investment in the EV company instead as if it were still worth 20x. All investors in the fund are happy to go along with that too, because otherwise they would have to recognize and report a loss of ~80% on the fund's EV investment.