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What Are Secondaries in Private Equity?

Buying existing fund stakes from other investors, often at a discount, and why the market is booming.

Last updated 8 August 2026 · 2 min read

Secondaries are the buying and selling of existing private equity fund stakes, rather than investing in a new fund. An investor who wants liquidity sells their commitment to a buyer, often at a discount to its stated value. The secondary market has grown into a record 240 billion dollars a year, becoming the main way private markets provide liquidity.

Private equity has a built-in problem: when you invest in a fund, your money is locked up for about a decade. Secondaries are the market that solves it, and in the last few years they have exploded from a backwater into the plumbing of private markets.

What they are

A secondary is the sale of an existing private equity fund stake from one investor to another. Instead of committing to a new, empty fund, a buyer purchases a stake in a fund that is already invested, with known assets. The seller gets liquidity; the buyer gets exposure to a maturing portfolio, frequently at a discount to the stake's stated net asset value.

LP-led and GP-led

Secondaries come in two forms:

  • LP-led. An investor (a limited partner) sells their own fund stake to a buyer because they want out early. The classic secondary.
  • GP-led. The fund manager (general partner) runs the process, most often by moving one or more prized assets into a new continuation fund, giving existing investors the choice to cash out or roll over. GP-led deals now account for about half the entire secondary market.

Why the market is booming

The traditional ways for private equity to return money, selling companies or floating them, have been difficult since 2022. IPO markets have been inconsistent and buyers cautious, leaving huge amounts of capital trapped in ageing funds. Secondaries provide the release valve. The market reached a record 240 billion dollars in 2025, up 48 percent in a year, and continues to grow. What was once a niche for distressed sellers is now, in the words of the market itself, the main way private equity delivers liquidity.

What it means for families

For a family office, secondaries are useful on both sides. As a buyer, a family can acquire proven assets at a discount, and skip the early "J-curve" years when a new fund's returns lag. As a seller, it can exit an illiquid position without waiting a decade. The one thing to watch, especially in GP-led deals, is the conflict of interest: when the same manager sits on both sides of the trade, the price and terms deserve independent scrutiny.

Frequently asked questions

What are secondaries in private equity?
Secondaries are transactions in which an existing investor sells their stake in a private equity fund to another investor, instead of the buyer committing to a brand-new fund. They let investors exit illiquid positions early, and let buyers acquire stakes in already-invested funds, often at a discount to net asset value.
What is the difference between LP-led and GP-led secondaries?
In an LP-led deal, an investor (a limited partner) sells their own fund stake to a buyer for liquidity. In a GP-led deal, the fund manager (general partner) runs the process, typically moving assets into a continuation fund that gives existing investors the choice to cash out or stay in. GP-led deals now make up about half the market.
Why are secondaries growing so fast?
Because traditional exits, IPOs and sales, have been harder since 2022, leaving investors' capital locked in ageing funds. Secondaries provide the liquidity those investors need. The market hit a record 240 billion dollars in 2025, up 48 percent, and is now the main plumbing of liquidity in private markets.

This guide is educational and general in nature. It does not constitute investment, legal, tax or financial advice.