The Secondaries Report

Buyouts’ annual report delves into the market forces shaping secondaries dealflow and fundraising

As more GPs and LPs turn to the secondaries market amid an ongoing liquidity crunch, weak exit markets and a slowdown in distributions, we explore how improved pricing, compelling supply/demand dynamics and structural innovations are driving transaction volumes and influencing the types of deals getting over the line. The report also looks at the evolution of the buyside and what the growing flow of capital means for one of the most undercapitalized corners of the private markets.





Since the launch of Buyouts Secondaries special in 2020, the secondaries market has grown significantly, largely due to the rise of GP-led and single-asset deals. The market also benefits from liquidity solutions like NAV financing, which is gaining popularity and now used in 20-30 percent of transactions. However, LPs are scrutinizing GP-led transactions, with many fearing they may negatively impact future fundraising. We explore these themes and more in the 2023 Buyouts Secondaries special report.

Five key trends in the rise of secondaries

Market growth is being driven by greater acceptance and increasingly diverse liquidity options.

To sell or not to sell: the LP’s dilemma with secondaries

LPs are facing a difficult choice as they balance liquidity challenges with the deep discounts on offer in the secondaries market.

Key questions: What implications do the SEC private fund reforms have for GP-led secondaries?

The regulator turned its attention to secondaries processes last year as part of a wider set of proposals designed to enhance disclosures in private markets.

Key questions: Do LPs need to conduct due diligence if they are rolling over exposure to a continuation fund?

Decision-making can be a resource-intensive process, although it is one that LPs are becoming more familiar with.

Key questions: Do GPs need to hire a third party to obtain a valuation and fairness opinion?

Proposed reforms in the US aim to make an independent fairness opinion a requirement in GP-led deals.

Key questions: How much does it cost to run a GP-led process and who pays?

The parties that bear the costs can vary according to the structure of the deal.

GP-led secondaries’ ESG opportunity

Continuation funds could provide sponsors with more time and capital to execute transformative sustainability initiatives.

The rise of NAV lending

Structured solutions can provide much needed liquidity without forcing LPs to crystalize a loss.

LPs scrutinize GP-leds

There is misalignment between investors and GPs on the topics of obstacles, red flags and expectations, a Capstone survey finds.

Are LPs missing the continuation fund boat?

Investors that do not participate in GP-led opportunities could be incurring an opportunity cost of at least 15% over the long run.

Secondaries skyrockets to second-most popular strategy in Q1

More capital was closed on for private equity secondaries in the first quarter of the year than for any other strategy outside of buyouts.

Secondaries Investor Advisory Survey 2023: Advisers choosey with mandates in choppy market

The average number of secondaries transactions advised on sat at 24 in a year where overall secondaries market volume was estimated at around $110bn.

Private secondaries have been on a growth trend for quite some time, but over the past two years in particular, investors have witnessed the incredible growth and maturation of the secondaries market. In part, this can be credited to the strength of the GP-led market – which Evercore says grew to $68 billion in volume in 2021, more than doubling the $32 billion of volume in 2020 – that is opening new doors to liquidity and value creation as private markets fundraises become ever larger and more frequent. Even in the face of significant macroeconomic challenges, the general sentiment across the market is that private secondaries are likely to continue on a path of meteoric growth.

Six key trends shaping the secondaries market

Secondaries continues to attract new investors, particularly as the GP-led trend dominates. Here are six takeaways from our 2022 special report on the market.

Second chances in secondaries

Price sensitive sellers are unwilling to accept material discounts, even in a volatile market. But there are still pockets of value to be found.

The LP/GP balancing act

LP sales made a comeback in the PE secondaries market last year, but GP-led sales continued their march to dominance, writes Keith Button.

The search for secondaries talent

Explosive growth has ignited a recruiting war among new and growing secondaries operations.

Easing the path to GP-led deals

While GP-led clauses in fund agreements are not a silver bullet, certain LPA provisions could help GPs and LPs better navigate these transactions should they arise.

Why LPs are frustrated with single-asset deals

The secondaries community should take note of investors’ annoyance at unreasonable deadlines and the amount of work needed to make decisions on these deals.

On the minds of the Next Gen

Rising stars in the secondaries space share their thoughts on trends dominating the sector and challenges ahead.

Joncarlo Mark: SEC proposals are a step in the right direction

A lack of transparency in GP-led deals can backfire on general partners, says former ILPA chairman and CalPERS veteran Joncarlo Mark.

Terms maker or terms taker?

While there are advantages to using an M&A process to set the price of a GP-led deal, buyers should not wear out this approach.

Credit secondaries take off in wake of covid crisis

Recent events bode well for credit secondaries – a small and rapidly growing part of the overall secondaries asset class.

Q&A: How secondaries can support the Science Based Targets initiative

Although secondaries investors have limited influence on underlying assets, there are steps they can take to engage with ESG issues and promote science-based targets, says Tim Clare of Anthesis.

Even as the pandemic was setting in, the market made it clear to us as we prepared the 2020 iteration of the Buyouts Secondaries special report that the secondaries market was ready to take off.

In retrospect, those predictions couldn’t have been more spot on. Even in the face of a global pandemic, 2020 dealflow volumes were the third highest they’ve ever been since the inception of the secondaries market. With a significant amount of pent-up demand for diversified LP portfolios and no sign that the GP-led market is slowing down, 2021 could become a year for the record books.

Five reasons the future is bright for secondaries

Annual deal volume was the third-highest ever last year as the market endured the pandemic. Here are five things to know going into H2 2021.

Innovation is in the air for the secondaries market

After an early pandemic lull, the secondaries market has made up for lost time as GP-led deals continue to march forward. But how could new players shape the market? And will LP trades get left in the dust?

What’s on the minds of secondaries’ Next Gen Leaders

Over the past year we have witnessed a potential inflection point for GP-led deals as they grew to nearly half of annual volume in 2020. Here, four of Secondaries Investor’s Next Gen Leaders of Secondaries share their thoughts on the future of GP-leds.

Continuation funds: Putting old wine in new bottles

Creativity is key as the secondaries market evolves and managers maneuver to hang on to their favorite assets.

GP-led market dives into new waters

A wave of GP-led activity helped buoy the secondaries market last year. Now, co-GP relationships and sponsors of all shapes and sizes using secondaries capital are just around the corner.

Five big changes to the secondaries market in 2020

The pandemic has certainly impacted the secondaries market – and it hasn’t been all bad.

Nine ‘new’ firms making waves in secondaries

M&A advisory businesses and mega-managers are storming a flourishing secondaries industry. We track the key players to watch.

Data room: A record-breaking year for secondaries

The average size of US-based funds nearly doubled year-on-year in 2020, with most closed funds gathering more than they initially sought.

The initial shock of the covid-19 pandemic is wearing off and markets are starting to adjust to the new reality. In the secondaries market, a brief pause to allow valuations to catch up with the new paradigm is expected to be followed by a flurry of activity as liquidity needs drive dealflow.

If the global financial crisis a decade ago taught us anything, it is that even in a steep downturn there is plenty of upside to be captured. Even with slow traditional secondaries dealflow, there’s still plenty of work to be done, and structured transactions offer opportunities for savvy investors to stay in the game.

Five points on the secondaries market: Not all doom and gloom

Activity is largely paused with the global spread of covid-19, but there are bright spots to look out for.

Finding opportunity in a crisis

The economic side of covid-19 has similarities with the global financial crisis, but secondaries now has a bigger toolkit at its disposal to support long-term growth.

The secondaries market’s black swan

The economic shock caused by the coronavirus is already filtering into the asset class.

As the market dives, secondaries take a safety stop

In two surveys published by Setter Capital in March and April, buyers and fund managers agreed that the secondaries market is in for a slow year.

Five tips for running a fair auction

Running a secondaries auction process that works smoothly for all parties and is not beset by conflicting interests is not easy, particularly in GP-led transactions. Here, advisors share their tips and a buyer gives additional perspective.

Upwelling Capital: How do we get out of this misaligned mess?

GPs and LPs both need to be realistic and flexible to reconstruct alignment in the most challenging situations, write Joncarlo Mark, Jim Moody, Vik Salh and Jesse Rodriguez of California-based boutique investment advisor Upwelling Capital Group.

Four ‘Young Guns’ share their thoughts on the secondaries market

Alumni of Secondaries Investor's annual grouping of outstanding professionals under 35 share lessons learned and how they've been affected by the covid-19 crisis.

How Whitehorse became the most envied firm in secondaries

Whitehorse Liquidity Partners is a rising star of the preferred equity market, led by one of the industry’s most charismatic figures. What’s behind its success? A strategy treated as ‘genius’ by some and with wariness by others.

GP-leds, it’s time to prove your worth

The manager-initiated secondaries market has long touted itself as a creative panacea; in these challenging times the strategy must step up to the plate.

Mega-funds front and center

Driven largely by massive hauls from the likes of Blackstone and Neuberger Berman, 2019 secondaries fundraising eclipsed that of 2018 and average fund size hit a historic high.


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