Strategic View: The global secondary market achieved record closed transaction volume of $162 billion in 2024, surpassing 2021’s $132 billion peak, driven by LP portfolio rebalancing ($87B in LP-led deals, +45% YoY) and GP continuation funds creating artificial liquidity amid extended hold periods averaging 5.8 years.
Full story: The secondaries market just became the private equity industry’s pressure valve. With traditional exit routes constrained—IPOs tepid, strategic M&A selective, and sponsor-to-sponsor deals requiring heroic valuations—LPs and GPs turned to secondaries in record numbers. The result: $162 billion in closed transactions for 2024, shattering previous records and establishing secondaries as mainstream rather than niche.
LP-led deals dominated, reaching $87 billion (+45% YoY). Why? Portfolio Liquidity Stress. Institutional investors over-allocated to private markets during the 2017-2021 boom now face negative cash flow as capital calls exceed distributions. Pension funds, endowments, and insurance companies are selling fund stakes at 85-90 cents on the dollar to rebalance, meet redemptions, or simply free up capital for new vintage diversification. For buyers—specialized secondary funds like Ardian, Lexington Partners, and Pantheon—this creates exceptional entry points into high-quality GPs at discounts to NAV.
GP-led transactions ($75 billion) reflect a different dynamic: Continuation Vehicles. When a fund reaches end-of-life but star assets aren’t ready to exit, GPs transfer them into new vehicles, offering existing LPs liquidity or roll-over options while bringing in new investors at refreshed valuations. This extends hold periods, resets economics, and allows GPs to “underwrite themselves” on conviction positions. Critics call it kicking the can; proponents argue it’s rational capital allocation when assets genuinely need more time.
The Club Deal Implications are profound. Secondaries essentially create synthetic exits, allowing primary club participants to realize returns without actual asset sales. This liquidity backstop encourages larger primary club deals—if things go sideways, there’s always a secondary buyer. But it also creates valuation questions: are secondary prices reflecting true fundamental value or just relative scarcity in a liquidity-starved market? As long as denominator effects persist and dry powder exceeds $2.5 trillion globally, secondaries will remain the industry’s most important release valve.
Summary: The secondary market’s record $162 billion volume in 2024 reflects private equity’s liquidity crisis transformed into an asset class. LP portfolio rebalancing and GP continuation funds dominate, with club deal participants increasingly viewing secondaries as an embedded exit option, fundamentally changing how primary deals are structured and priced.
Source: BlackRock Secondary Market Update H2 2024, BlackRock FY2024 Recap
