Private Equity Secondaries

Private Thoughts From My Desk…….#40   The secondary market is warming up.   That is the unambiguous message from the Campbell Lutyens 1H 2025 report. With $110 billion in volume during the first half alone, this market is now operating at a scale and speed few would have imagined even two years ago. But beyond the headline figures, what stood out to me most was the continued evolution of GP-led deals—specifically, the fact that over half of these transactions priced at or above par (See chart below).   Yes, you read that right. Par. In a secondary market.   This is not just a technical pricing detail. It is a signal that something fundamental is happening in private markets. GP-led secondaries are becoming the preferred path for some of the best-performing assets in private equity. Pricing at or above par is not just a win for GPs and existing LPs. it is a reflection of intense demand among buyers who are now competing for access to scarce, high-quality paper.   What’s driving this pricing strength? A few things stood out. First, the selection bias. GPs are not bringing just any asset to market. They are bringing trophy assets. Cash generative. Durable. Often tech-enabled or exposed to long-term secular tailwinds. That kind of quality commands a premium in today’s environment.   Second, the supply-demand balance has shifted. Dedicated GP-led vehicles now control more than $31 billion of dry powder. Traditional secondary funds continue to raise more capital and do more GP-led deals. Sponsors have pricing leverage they simply did not have before.   And it’s not just single-asset deals that are seeing the love. Multi-asset continuation vehicles—long considered a harder sell due to structural complexity—are also seeing meaningful momentum. In fact, 44% of MACVs priced at or above par, a staggering jump from just 28% in 2024. This tells me the market is heating up. This is a trend. The presence of evergreen vehicles and more specialized capital has added further depth to the buyer pool. The result is a more liquid, more competitive, and more pricing-efficient market.   For GPs, the message is clear. The secondary market is no longer just a tool for liquidity. It is now a strategic extension of fund management. And for LPs, pricing at or above par is a signal that continuation vehicles, once viewed with a touch of skepticism, are delivering real value.   If this keeps up, we may need to start treating the secondary market as one of private equity’s most dynamic growth engines. #privateequity #privatemarkets #privatethoughtsfrommydesk

For the first time in venture history, three distinct channels share the liquidity burden roughly equally. A decade ago, secondaries barely registered. They accounted for roughly 3% of exit value in 2015. Today they claim 31% : nearly $95b in the trailing twelve months. The shift accelerated after 2021’s IPO bonanza. When public markets closed their doors in 2022, investors found alternative routes. Secondaries absorbed demand that would have flowed to traditional exits. When Goldman Sachs acquired Industry Ventures, the transaction signaled secondaries have arrived. Morgan Stanley followed with EquityZen, then Charles Schwab announced its acquisition of Forge Global. Wall Street recognized the structural change before most of venture did. This matters for founders & investors. When IPOs dominated exits, fund models assumed a small number of public offerings would generate the bulk of returns. Now liquidity arrives through multiple doors. A founder might sell secondary shares to patient capital while the company remains private. A GP might move positions through continuation vehicles. An LP might trade fund stakes on an increasingly liquid secondary market. The 830 unicorns holding $3.9t in aggregate post-money valuation cannot all exit through IPOs. The math doesn’t work. At 2025’s pace of 48 VC-backed IPOs, clearing the unicorn backlog would take seventeen years. Secondaries provide a release valve that traditional exits cannot. Companies like OpenAI have embraced this reality, running employee tender offers while voiding unauthorized secondary transfers. The largest private companies now manage their own liquidity programs rather than waiting for public markets. Today, secondary liquidity concentrates in the top 20 names. SpaceX, Stripe, OpenAI. For the founder of company #50, the secondary market remains largely theoretical. For secondaries to succeed as a broad asset class, buyers must underwrite positions in companies without household recognition. As the market grows, this coverage gap becomes opportunity. For LPs starved of distributions since 2022, the expansion of secondary channels offers hope. The $169b in cumulative negative net cash flows needs somewhere to go. More exit paths mean more opportunities to return capital. When a Series B employee asks about liquidity today, the answer isn’t “wait for the IPO.” It’s “we’re planning a tender offer next year.” A decade ago, secondaries were a footnote. Now they’re infrastructure. Liquidity flows where it can, not where tradition suggests it should.

Secondaries Are Quietly Taking Over Not a niche anymore. A core strategy for uncertain times. What raised 30% of all private equity capital last quarter—and why aren’t more people talking about it? Secondaries aren’t just a side dish anymore. In Q1 2025, they accounted for 30% of all global PE fundraising—the highest share ever recorded. That number was inflated by one $30B fund close. But don’t let the outlier distract you from the trend. This is structural. Not cyclical. Here’s what’s changed: - LPs want liquidity without giving up exposure. - GPs need more time—and vehicles—to unlock value. - Everyone’s under pressure from slower exits and longer J-curves. Secondaries offer flexibility, price transparency, and faster capital recycling. From my CIO seat, they’ve moved from “interesting” to essential. It’s also where dislocation becomes investable. Discounts are real. Quality is up. And vintage diversification is built-in. What we’re watching - Continuation fund terms and volume - Discount levels in LP-led deals - Secondary pricing trends vs. reported NAVs Investor action plan - Reframe your allocation lens: Secondaries aren’t just tactical—they’re foundational. - Monitor manager selection: Skill dispersion is wide in secondaries. - Match secondaries to outcomes: Want cash flow? Vintage diversity? - Quicker turns? Clarify the goal. If the front door of private equity is slow, the back door is now an opportunity in itself. #bealtetnative #alternativesforall

Will the secondary markets ever become a traded market like the bank loan market? We sat down with private markets veteran and Partner, Global Head of Vintage Strategies, External Investing Group (XIG) at Goldman Sachs Asset Management Harold Hope to discuss the rapid growth and evolution of the secondary market. In the latest Alt Goes Mainstream AGM Unscripted podcast, Harold and I had a fascinating conversation about the nuances of the secondary market and what the future of secondaries might look like: ➡️ Perspectives from Harold’s early days in secondaries 25 years ago, when Goldman had raised its first $400M fund in secondaries and when the secondaries industry was doing around $2B per year in transaction volume. ➡️ The evolution of innovation in the secondaries market. ➡️ Why problem-solving is a defining feature of secondaries. ➡️ What is the right skillset required to be a great secondaries investor? ➡️ Why secondaries is fundamentally a valuation oriented business. ➡️ Are secondaries returns driven by buying high-quality assets or by buying at steep discounts? ➡️ Misconceptions about continuation vehicles and how the trend of private companies staying private longer impacts CVs. ➡️ The how and the why behind Goldman’s recent acquisition of Industry Ventures and why Goldman is excited about the opportunity set in venture and growth secondaries. ➡️ Why scale matters in secondaries. ➡️ Why secondaries might not become a traded market like the bank loan market and why secondaries may not fully achieve standardization because managers may not want completely uniform standardization. ➡️ Why secondaries can be an on-ramp to private markets for private wealth investors. Thanks Harold for sharing your wisdom, expertise, and passion about secondaries and private markets. https://lnkd.in/evTHaVDG

For the first time, US VC secondary sales exceeded IPO exit value Here's why this matters 👇 ◾️ The numbers are clear (Jun 24' - Jun 25'): - Secondary transactions: $61.1B - IPO exits: $58.8B This isn't a close race anymore. Secondaries have officially overtaken public markets as the primary liquidity mechanism for VC. Here's what's behind this shift. ◾️ Let's walk through each driver, starting with the biggest one: companies staying private longer. The average time to IPO has stretched from 4 years (1999) to 11+ years today. Stripe, OpenAI, and other unicorns have zero rush to go public. Why deal with public market volatility when you can access capital privately? ◾️ Driver #2: The SPV explosion is wild. The data: - 545% jump in secondary SPV count (2 years) - 1,000% growth in total value raised What was once a niche financing tool is now the backbone of venture liquidity infrastructure. ◾️ Driver #3: Tender offers became routine. Companies like Ramp now regularly offer employees liquidity through structured tenders. I think this shift is brilliant – it's simultaneously: - Employee retention tool - Pressure release valve for early stakeholders - Recruitment advantage ◾️ Driver #4: Sector concentration amplifies everything. Hot sectors driving secondary demand: - AI companies (obvious winner) - Cybersecurity (Trump priorities) - National defense (geopolitical focus) When everyone wants exposure to the same 50 companies, secondary markets heat up fast. ◾️ Now, let's talk about what this really means. Here's my contrarian take: this "success" masks a structural problem. When your primary exit strategy becomes "sell to other VCs," you've created a closed loop that doesn't generate real wealth for the broader economy. ◾️ The sustainability question keeps me up at night. The math: - Secondary markets provide liquidity - But they don't create new value like IPOs do - You're shuffling existing equity around Instead of accessing true growth capital from public markets. ◾️ What does this mean for GPs? You need secondary market expertise now. Your LPs will ask about: - Tender offer strategies - Secondary SPV structures - Alternative liquidity plans This isn't optional anymore – it's table stakes for fundraising. ◾️ What does this mean for LPs? I assume you'll see more secondary-focused strategies in GP pitches. But ask the hard question: are you getting exposure to real growth, or just paying higher prices for the same assets in a closed ecosystem? ◾️ Bottom line: we're witnessing a fundamental shift in how VC creates and distributes liquidity. The data supports it. The trend is accelerating. But eventually, this ecosystem needs real exits to public markets. The question is when, not if, this dynamic reverses. What do you think about the state of secondaries market?

Over each of the past 2 years, just 𝟱% of the total VC market value has been distributed to LPs—leaving a 𝗺𝗮𝘀𝘀𝗶𝘃𝗲 𝗴𝗮𝗽 𝗶𝗻 𝗹𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆. What can GPs do? 𝗘𝗻𝘁𝗲𝗿 𝗖𝗼𝗻𝘁𝗶𝗻𝘂𝗮𝘁𝗶𝗼𝗻 𝗙𝘂𝗻𝗱𝘀 💡 • LPs are restless for liquidity. While recent fund vintages don't have DPI to give, more mature venture funds are stretching well beyond their original 10-year timelines. 1-to-2 year extensions are manageable, but after 12+ years (with fees piling up), LPs understandably want their money back. •  Continuation funds have become a go-to strategy in private equity to fix this problem. LPs can either cash out or roll over their interests into a new vehicle. This provides liquidity for LPs who want to cash out while allowing long-term investors to stay invested & maintain exposure to the portfolio. According to a 𝗨𝗻𝗶𝘃𝗲𝗿𝘀𝗶𝘁𝘆 𝗼𝗳 𝗖𝗵𝗶𝗰𝗮𝗴𝗼 𝗕𝗼𝗼𝘁𝗵 paper: 🔹 +𝟳𝟱𝟬% 𝗶𝗻𝗰𝗿𝗲𝗮𝘀𝗲 in deal value over 5 years, hitting $68 billion in 2021. 🔹 𝟴𝟬-𝟵𝟬% 𝗼𝗳 𝗟𝗣𝘀 in legacy funds opt to cash out rather than roll over. 🔹𝟰𝟰-𝟱𝟬% of total secondary market volume came from GP-led secondaries between 2020-2023—that is, $102-126 billion annually. However, there are challenges, particularly in venture capital: 🔹 𝗤𝗦𝗕𝗦 𝗘𝗹𝗶𝗴𝗶𝗯𝗶𝗹𝗶𝘁𝘆: When a continuation fund buys assets from the original fund, LPs might lose their QSBS eligibility. QSBS typically requires the stock to be held directly by the taxpayer or through a pass-through entity (like a VC fund) for at least 5 years. Careful tax structuring around this is possible, but it adds complexity. 🔹 𝗖𝗼𝗻𝗳𝗹𝗶𝗰𝘁𝘀 𝗼𝗳 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁: GPs may collect more fees and carry without full performance alignment, creating tensions between LPs & new LPs. Also LPs often lack sufficient data for informed decisions. 🔹 𝗡𝗼𝘁 𝗮𝗹𝗹 𝗟𝗣𝘀 𝘄𝗮𝗻𝘁 𝗼𝘂𝘁: Some LPs may prefer to stay invested—there's no "status quo" option; LPs forced to cash out or accept new terms. 🔹 𝗖𝗼𝗺𝗽𝗹𝗲𝘅𝗶𝘁𝘆 𝗮𝗻𝗱 𝗥𝗮𝗿𝗶𝘁𝘆: While this strategy is relatively common in PE, it's uncommon in VC, at least from my experience. Would be interested to hear how costs and time play a role in this strategy. Cooley has offered some alternative strategies for creating liquidity while managing ongoing investments in a VC fund (link in comments). 𝗕𝗼𝘁𝘁𝗼𝗺 𝗹𝗶𝗻𝗲: Continuation funds are an option to provide liquidity to LPs without forcing GPs into bad exits. But GPs need to provide full disclosure of all potential conflict of interest and have full alignment with a majority in interest of their LPs. Thoughts? Anyone else seeing this trend? How are GPs balance their LP liquidity needs with long-term value creation for their portfolios?

Private market secondaries, from 2022-2023, experienced fundraising growth in excess of ~100%—the highest of any sector.* Key driving factors of this growth are post-ZIRP portfolio rebalancing as a byproduct of over-exuberance (denominator effect), a relatively closed IPO window, muted M&A activity, and the private markets valuation “lag”, among others.  This broader market reset and increasing robustness of secondaries markets can present a compelling opportunity for private market investors. Investors should broadly consider how their portfolios are positioned with respect to the valuation lag—on both sides—situationally executing dispositions and adding exposure, where favorable.  For example, in 2022, the unprofitable public markets tech index was down ~70% and private market valuations remained largely unchanged—we took this opportunity to conduct a full review of our portfolio exposure to high-growth, unprofitable portfolio companies. As a result, we exited a significant amount of such exposure.   And now, nearing the end of 2024, the converse is largely true—private market valuations have generally lagged those of their public market counterparts—creating a situation where adding exposure via secondaries can be attractive in select pockets of the market.   For example, in private equity, there are instances of indiscriminate selling for both single-asset exposures and LP interests at relatively low multiples (<6x EBITDA) with durable cash flow and strong fundamentals. In such a case, adding exposure can offer favorable risk/return asymmetry.    Here’s a quote from one of our investment partners regarding the opportunity in private equity continuation vehicles, “80-90% of the LPs on the other side of the trade (i.e., the sellers), didn’t even look at the data room.”   Investors should have a deep understanding of underlying valuation policies, actively monitor their exposures, and be proactive in secondaries to create value for clients and generate excess return.  *Source: Pitchbook, 2024.   

If you only watched the stock market tickers in #2025, you missed half the story. While IPOs captured headlines, a quieter shift played out across India’s private ecosystem. Secondary transactions in unlisted companies moved from being occasional to becoming a planned part of liquidity and exit strategies. Early investors, founders and employees increasingly took partial liquidity without forcing an IPO. At the same time, capital actively flowed into proven private businesses through structured secondary routes. The entry and expansion of dedicated secondary funds in India during 2025 underlines how institutional this market has become. Based on industry estimates and reported activity, total secondary transaction volume in India’s unlisted space is estimated at roughly $10Bn to $20Bn in 2025. Most of this activity remains private, but the scale is now hard to ignore. On pricing, most secondary deals were done at sensible discounts to the latest primary valuation, reflecting liquidity, timing, and a win-win for both buyers and sellers. Some of the largest and most active secondary stories of the year included: NSE India - Continued to be among the most actively traded unlisted assets, with strong institutional participation ahead of a potential listing. Lenskart.com - Pre-IPO secondary transactions that allowed early investors and ESOP holders to monetise partially. PhonePe - One of the biggest secondary-led liquidity events, driven largely by employee and early investor exits ahead of its IPO journey. Zepto - Large secondary sales and discussions alongside late-stage funding rounds to provide liquidity while reshaping long-term ownership. 2025 also saw companies like Pine Labs, Shadowfax, Urban Company, BlueStone, Meesho, Fractal, Kuku FM, BharatPe, Flipspaces, Porter (to name a few) where secondary components provided targeted liquidity rather than headline exits. Why this matters: - For LPs, DPI and real cash returns matter more than paper valuations. - For founders and employees, secondaries turn years of effort into real outcomes. - For late-stage investors, they offer access to proven companies with better risk reward ratio. As we enter #2026, the capacity to facilitate secondary liquidity remains a key differentiator for top-tier funds and late-stage startups. incentiv Tabulate Ranjit Sundaram Diganth Jagadish Indranil Tiwary #PrivateMarkets #SecondaryDeals #UnlistedShares #VentureCapital #PrivateEquity #IndiaStartups #Liquidity #Exits

For the first time, US VC secondaries outpaced IPOs in exit value in the last 12 months. Here’s why, imo, secondaries can continue to beat IPOs: 1- Speed vs. Uncertainty
 IPOs depend on fragile windows of public market appetite. With investors often struggling to value tech. In contrast, secondaries window is continuous. LPs and GPs can transact when they need liquidity, not when the market “allows” it. 2- Pricing Discipline
 Secondaries aren’t less hype-driven valuations. They’re priced using empirical models: cash flow histories, DPI momentum, potential exit windows etc. to predict outcomes This makes them more rational than IPOs, which often overinflate or crash post-listing. 3- Better Alignment
 Continuation funds and GP-led secondaries give managers more time to compound value, while still offering liquidity to LPs. IPOs, on the other hand, force companies into the quarterly treadmill, be subject to market volatility, and often misaligning with long-term strategy 4- Scale & Maturity
 The secondary market is no longer a niche. It hit $160B globally in 2024 and is on track to grow by 30% YoY. Secondary investors are bigger, smarter, and more sophisticated — sitting on large dry powder to put to work. IPOs may grab headlines, but secondaries are quietly becoming the real plumbing of private markets. A secondary is a market mechanism: quiet, liquid, and increasingly, a more reliable exit. If you’re building, investing, or raising, it’s time to reframe:
The future of liquidity might not be on Wall Street. It might be in secondaries :)

Secondaries aren't a workaround anymore. They're infrastructure. The growth isn't cyclical — it's structural. And the numbers make the case better than any narrative: $240B in annual volume. GP-leds are climbing from 5% to nearly 20% of exit activity in five years. Nearly half of LP sellers are transacting for the first time. This isn't distress. This is design. For a long time, liquidity in private markets was something you waited for — an IPO, a trade sale, a distribution that arrived on the GP's timeline. Secondaries changed the question. Liquidity is no longer an outcome. It's something you plan for. That shift has real consequences: for how LPs construct portfolios, how GPs think about capital duration, and how the industry measures what a well-managed program actually looks like. DPI matters now in a way it didn't when exits were faster and more predictable. As IPO cycles elongate and hold periods extend, secondaries have become the mechanism that keeps private markets liquid by design — not by accident. The future of private investing won't just be defined by who generates the best returns. It'll be defined by who manages liquidity with the same intentionality they bring to deployment. Great chart by Andrea Auerbach from Cambridge Associates #LP #GP #PrivateEquity #Secondaries #PrivateMarkets #AlternativeInvestments #venturecapital