In April, several measures of economic and policy uncertainty exceeded levels last seen at the start of the COVID pandemic.
Although this volatility may have delayed the long-awaited resurgence of M&A and IPO activity, it also reinforced the appeal of secondary transactions as a tool for GPs and LPs to rebalance portfolios, free up or raise cash, and buy time to position for more favorable exits. No matter what the rest of 2025 holds, GPs and LPs should be surveying options in a secondary market that is broader, deeper, and more diverse than ever before.
As reported by Jefferies, global secondary volume hit a record of $162 billion last year, a 45% increase over 2023. This exceeded the previous record of $132 billion in 2021. LP transactions accounted for $87 billion of last year’s volume, and GP-led transactions contributed $75 billion, fueled by:
- An expanding buyer universe: Last year, global dedicated available capital reached a record of $288 billion, which is coming in from more sources than ever before. In addition to ever-increasing fund sizes from established and new traditional secondary investors, we expect nearly one-quarter of all secondary capital raised in the next 12 months to come from evergreen retail vehicle capital (e.g., ’40-Act funds).
- More creative liquidity solutions: While 84% of GP-led secondary transactions were via continuation vehicles (and half of which were single asset), the LP transaction landscape has expanded well beyond direct portfolio sales to include preferred equity, managed funds, and SPV-affiliate transactions.
- Competitive pricing: The average pricing of LP-portfolios reached 89% of net asset value (NAV) last year, a 400-basis point increase over 2023, spurred by rising public markets, ample supply of quality and newer vintage portfolios, and lower interest rates. Although many Q1 2025 transactions came in at a slightly lower percentage of NAVs due to market uncertainty and volatility, buyers and sellers are still generally more aligned on price than in 2022 and 2023.
Something else has shifted in the secondary market as well. Several years ago, many LPs and GPs we spoke to saw the secondary market as a place to dip into to solve unforeseen problems in their portfolios or deal with unwelcome macroeconomic developments. Today, they are utilizing secondary markets more programmatically, managing portfolios serially via annual or bi-annual secondary sales.
For GPs, secondary transactions offer a reliable path to generate DPI in an otherwise uncertain environment and raise substantial fee and carry paying capital. For many GPs, conducting a single-asset transaction for a high-performing trophy asset can raise as much new fee-paying capital as their latest flagship fundraise. At the same time, continuation vehicles enable them to hold onto and reinvest in their existing assets while waiting for a better IPO or M&A window. LPs increasingly rely on these transactions to manage liquidity, rebalance portfolios, comply with regulations, or optimize exposure to specific asset classes. This helps explain how the Jefferies Secondary Advisory team was able to execute on 18 deals in Q1 2025 – 7 GP-led and 11 LP-led – totaling $9 billion in transaction volume.
As the year progresses, we expect strong interest in secondary strategies, be they buyouts, real estate, or venture, regardless of the market environment. Suppose public market volatility persists, and IPO and M&A activity remain muted. In that case, secondaries will continue to be a viable alternative for GPs and LPs for the same reasons they were over the last few years. However, if IPO and M&A activity picks up, that will also likely deliver better pricing for LP portfolios in the secondary market and drive even stronger benchmarking valuations for GP-led transactions. That’s precisely what happened in 2021, when IPO and M&A activity were record-breaking, and so too was the volume of secondary transactions, which was the second highest year on record ever.
Amid immense uncertainty, secondaries have a second wind that will likely keep blowing no matter what the market throws at investors in 2025 and beyond.
