What’s Behind the Recent Growth in Private Markets Secondaries?

Private markets secondaries experienced a surge in 2024, with global transaction volume reaching $162 billion—a 45% increase from 2023 and surpassing the previous record of $132 billion in 2021.¹ Fueled by a mix of factors, including continued liquidity needs from limited partners (LPs), a narrowing bid-ask spread, strong investor demand for diversified portfolios, and record levels of dedicated capital, the market's momentum is expected to continue into 2025, with volume projected to exceed $175 billion.²

With more LPs and general partners (GPs) using secondaries for portfolio management and liquidity, understanding the evolving dynamics of the market may be crucial for advisors navigating potential opportunities in this space.

Record-Breaking Secondaries Volume Supported by Portfolio Management and Liquidity Needs

Secondary market volume surged in 2024, with both LP-led and GP-led transactions hitting record highs globally. According to Jefferies, LP-led transactions totaled $87 billion, as LPs sought solutions for portfolio management and liquidity amid capital constraints and slower-than-expected distributions.³ Meanwhile, with a more active second half of the year, GP-led transactions soared to $75 billion, reflecting a 44% year-over-year increase and marking the largest GP-led market to date.⁴

Source: Jefferies, “Global Secondary Market Review,” January 2025

What might have driven this growth? As in previous years, even with a 19% increase in IPO volume and a roughly 12% increase in M&A activity compared to 2023, GPs continued to face constraints in delivering distributions to their LPs in 2024.⁵ LPs turned to the secondary market seeking to rebalance portfolios and generate liquidity, with more attractive pricing for secondaries sellers than in previous years.

Furthermore, as the market for secondaries evolves and expands, GPs and LPs alike are turning to these transactions more systematically. According to a survey by Lazard, 51% of LPs who turned to the secondary market in 2024 did so for portfolio management reasons, while only 33% were motivated purely by their liquidity needs.⁶

Major Trends Shaping the Secondaries Opportunity Set in 2025

Estimates for the 2025 secondary market vary, but consensus across the industry suggests continued growth, with volumes potentially exceeding last year’s levels. Jefferies expects market volume to surpass $175 billion in 2025.⁷ Lazard’s deal volume estimates range from $180 billion on the low end to as much as $220 billion on the high end.⁸ According to a survey by Campbell Lutyens, 73% of secondary buyers anticipate volumes of more than $150 billion.⁹ This was also the first year in their survey when no buyer expected to see sub-$100 billion volumes, reinforcing a belief in the market’s continued advance.

Below we cover some of the major trends supporting increased secondaries supply and demand across private markets.

A Rise in LP-Led Secondary Market Pricing

Growth on the supply side of the secondaries market may be attributed to better terms and pricing for LPs looking for liquidity. Pricing in the LP-led secondary market continued to climb in 2024, with average pricing across strategies reaching 89% of funds' reported net asset values (NAV), according to Jefferies.¹⁰

Source: Jefferies, “Global Secondary Market Review,” January 2025

A few factors contributed to this narrowed spread on average, including:

• Stabilizing Macroeconomic Environment Rising public markets and interest rate cuts led to increased confidence in PE-backed companies and the future exit environment for these assets.

• Influx of Dedicated Capital As retail investors increasingly allocate capital to evergreen vehicles, demand for secondaries has intensified, driving more competitive pricing.¹¹ In addition, available capital earmarked for secondaries, including dry powder and near-term fundraising estimates, reached as high as $288 billion last year.¹²

• Skew Towards Younger Vintages In the last 10 years, the average age of a fund sold in the secondary market was 8.3 years; in 2024, the average fund sold was only 6.6 years, the youngest average to date.¹³ With more time left for growth, buyers were more willing to pay premiums.

• Focus on Higher Quality Pricing for buyout funds—which led the LP-led secondary market, accounting for 70% of overall volume—rose to 95% of NAV as more buyers sought out more mature, higher-quality assets for their portfolios.¹⁴

As we highlighted in our 2023 secondaries market update, when evaluating private equity secondaries, the discount to a fund's intrinsic asset value can matter more than the discount to its last reported NAV, as long-term returns are typically driven by capital appreciation of underlying assets rather than just the initial markdown. Additionally, LP-led transactions tend to feature deeper discounts than GP-led deals, as individual investors may be more motivated to sell at a reduced price depending on their liquidity needs.

Expansion of GP-Led Transactions via Continuation Vehicles

The GP-led market continued to mature, surpassing its previous peaks from 2021 by 10%, as M&A and IPO activity again fell short in 2024, at 52% and 72% below 2021 volumes, respectively.¹⁵ Indeed, GP-led transactions have become a preferred alternative to traditional M&A exits, particularly for sponsors who need to provide liquidity but also want to hang onto their highest-conviction assets.

Close to eight in 10 GP-led deals in 2024 used continuation vehicles (CVs).¹⁶ According to Evercore, 55% of continuation vehicles sponsored by middle-market GPs last year were at least half the size of their latest flagship funds. This highlights GPs’ commitment to retaining portfolio assets they believe are delivering strong performance.

Roughly half of total GP-led volume was attributed to single-asset continuation funds.¹⁷ According to Lazard, these single-asset vehicles became more popular than in previous years relative to GP-led multi-asset CVs, as buyers of these CV stakes appeared to appreciate the continued potential of these so-called “trophy assets” and alignment with GPs. Roughly 87% of single-asset CVs were priced at 90% or more of their underlying asset’s NAV, up from 2023, further reflecting the quality of the assets available in the market.¹⁸

Secondary buyers in 2024 seemed highly selective when assessing these single-asset CVs, showing a preference for assets and sectors with more reliable cash flows, more durable profitability, and business stability. Technology—in which recurring SaaS business models are common, and earnings are more consistently positive—overtook healthcare as the most active sector for GP-led, single-asset CVs in 2024, both followed by business services and industrials.¹⁹

Continued Growth of Evergreen Retail Vehicles and Increasing Deal Sizes

Perpetual or evergreen fully-funded structures have begun to transform the secondary market. Industry reports estimated these vehicles accounted for up to a third of total secondary fundraising in 2024.²⁰ Perhaps because of their need to deploy capital quickly and cater to nearer-term liquidity needs of their own LPs, these evergreen funds appeared more willing to pay premium prices for secondary stakes, further narrowing bid-ask spreads across the LP-led market.

The more diversified portfolios available in the secondary market tend to include underlying companies or assets that are closer to exit, which can potentially accelerate distributions, a feature that can be especially attractive for GPs managing these evergreen vehicles. The ability for these managers to evaluate existing portfolios with more upfront information can also help them better manage risk—which may be a reason secondaries strategies have experienced a lower risk profile historically compared to primary buyout strategies.

The emergence of these evergreen vehicles also coincided with a trend toward larger deal sizes and a more concentrated set of buyers at the top end of the market. Overall, according to Jefferies, the secondary market saw 51 deals exceeding $1 billion, up from 34 in 2023.²¹ The top buyers also made up a significant portion of the overall volume, especially for GP-led deals, with the top five GPs contributing nearly 70% of total capital raised to date.²² Similarly, Evercore reports that the top eight accounted for more than half of the dry powder available for secondaries in the first half of 2024.²³

Beyond Buyout: Emerging Infrastructure, Private Debt Secondaries Markets

Though buyout continues to dominate both GP-led and LP-led supply, secondary markets in other asset classes, especially infrastructure and private debt, grew more robust in 2024.

In infrastructure, GP-led activity has been strong, driven by momentum in energy, including renewables, as GPs look to retain their higher-cash-generating assets.²⁴ Secondaries deals for data center strategies have also increased in line with primary opportunities in the space.

Source: Campbell Lutyens, Secondary Market Overview Full Year 2024

According to Jefferies, private debt and venture secondaries are also expected to expand, albeit at different paces.²⁵ Private debt followed closely behind infrastructure as a share of both GP-led and LP-led deals in 2024.²⁶ With record-setting fundraising and continued growth on the horizon across these markets, managers have established dedicated secondaries teams to underwrite deals in these emerging asset classes.²⁷

Overview of Risks Associated With Secondaries Investing

Private equity secondaries can present a compelling opportunity, but it's essential for advisors to recognize the inherent risks across asset classes. Like other private market strategies, secondary funds often acquire illiquid stakes in private companies, most likely resulting in illiquidity or more limited liquidity compared to public markets.

Furthermore, the future performance of the underlying portfolio companies is not assured, meaning investors could experience partial or total capital loss. While secondary investments typically offer shorter durations, they may still face liquidity challenges, particularly if market demand for specific fund managers declines. Additionally, investors in fund-of-funds or specialized secondary funds must navigate two layers of general partners, which may introduce extra fees and expenses.