Secondaries

Strategy Type

Liquidity Solution

Typical Stage

All Private Stages

Return Profile

Shorter Duration

What It Is

Secondary investing purchases existing stakes in private companies or funds from holders seeking liquidity, rather than putting fresh capital into the business.

The company itself receives nothing — the transaction is between investors, or between an investor and an employee shareholder.

Typical Approach

Buy limited partner interests in existing funds
Purchase direct stakes from employees or early shareholders
Structured transactions providing liquidity to existing funds
Underwrite an already-visible portfolio rather than a blind pool
Frequently transact at a discount to stated valuations

Return Drivers

Discount to net asset value at purchase
Shorter duration, since assets are already mature
Reduced blind-pool risk — the portfolio is visible
Seller motivation creating pricing opportunity
Faster capital return than primary fund commitments

Key Risks

Valuation of illiquid private assets is genuinely difficult
Limited information relative to the original investor
Transfer restrictions and company consent requirements
Discounts narrow when many buyers compete
Inheriting positions in companies already underperforming

What Founders Should Know

Secondary transactions let employees and early investors realise value without the company selling or listing, which can materially help retention.

But secondary prices set reference points that later investors notice, and most companies retain approval rights over transfers for exactly that reason.

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