Private Equity Insights
Private Equity Secondary Market Explained: LP & GP Guide (2026)
The secondary market has evolved into an established part of private markets. What was once viewed mainly as a route for distressed or forced sellers is now used by investors, fund managers and companies to create liquidity, reshape portfolios and retain exposure to strong assets for longer. In a market where traditional exits have often taken longer than expected, that matters.
The growth in market volume underlines that shift. Private Equity Wire said the market was on track to reach up to $150 billion in 2024. By the first half of 2025, Setter Capital estimated total secondary transaction volume at $102.23 billion, while UBS reported $101 billion for the same period and said full-year 2025 volume ultimately went on to exceed $200 billion. That is a clear sign that private equity secondaries are no longer a specialist corner of the market. They are becoming a normal part of how private capital is managed.
Why the Secondary Market Is Expanding
Many investors still want liquidity, but many assets are not yet at the ideal point for sale. M&A activity has improved in some areas, but not enough to clear the backlog across private equity portfolios, and IPO markets have remained selective. In that environment, the secondary market offers more flexibility to both LPs and GPs.
For LPs, secondaries can help rebalance portfolios, reduce concentrations and generate cash. For GPs, they can provide a way to hold on to assets that may still have room to grow, often through continuation vehicles rather than outright exits. PitchBook reported that GP-led deal counts increased from 16 in 2020 to 89 in 2024, showing how quickly this part of the market has expanded.
The Secondary Market Is Broader Than Many Assume
One of the most important changes in recent years is the range of transaction types now available. The market is no longer defined only by LP portfolio sales. It now includes GP-led continuation funds, direct secondaries, preferred equity, credit secondaries and other structured liquidity solutions.
Setter Capital’s H1 2025 report showed $59.49 billion of fund secondaries and $42.74 billion of direct secondaries in the first half alone. That breadth matters because different portfolios require different solutions. In some situations, a full sale is the right path. In others, the better answer may be a partial sale, a restructuring or a process that allows existing investors to choose between liquidity today and continued exposure tomorrow.
Why This Matters for DACH Investors and Companies
For DACH-based investors and companies, this shift is especially relevant. The region has a strong base of healthcare, industrial, technology and specialist businesses, many of them in exactly the size range where careful positioning and targeted execution matter most.
In that context, secondaries are not only a liquidity solution. They are also a portfolio management tool. They can help investors release capital from mature positions, rebalance exposures and create room for new priorities. For companies, particularly in sectors such as life sciences, medtech, energy and technology, externalisation can provide a route for non-core projects that still carry real value under different ownership.
That is increasingly important in a market where buyers are selective and where execution quality can materially affect outcome.
Geographic Balance Is Playing a Bigger Role
There is also a wider market backdrop worth acknowledging. It would be too strong to suggest that investors are broadly moving away from US assets, but there is clearly more focus now on geographic balance and jurisdictional risk than there was a few years ago. In a more uncertain geopolitical environment, some investors are paying closer attention to concentration risk, policy volatility and regulatory exposure.
In that context, European private equity opportunities, and DACH opportunities in particular, are drawing fresh interest. Not necessarily as a replacement for US exposure, but as a way to add diversification and, in some cases, more stable underwriting conditions. This is particularly relevant where assets sit in specialist industrial, healthcare and mid-market segments with a clear strategic rationale for buyers.
Pricing in the Secondary Market Has Become More Nuanced
Another reason the market matters more today is that pricing has become more sophisticated. The old assumption that secondaries always require steep discounts is no longer accurate in every case.
Private Equity Wire reported that in one market survey, only 17 percent of respondents said they would accept below 80 percent of NAV, while 66 percent were targeting pricing of 90 percent of NAV or higher. Setter Capital also reported wider use of deferred payment structures to help bridge valuation gaps between buyers and sellers. In practice, that means outcomes are shaped less by the fact that an asset is being sold in the secondary market and more by asset quality, structure, preparation and process execution.
Externalisation Is Also Part of the Opportunity
The same logic applies to externalisation of investments. A project may be non-core to one owner but highly attractive to another. In sectors where development programmes are expensive and strategic focus matters, moving those projects into the right hands can release capital, simplify a portfolio and preserve value that might otherwise be overlooked.
For DACH-based portfolios, especially in life sciences, medtech and specialist technology, that can be a highly practical route to value realisation.
The private equity secondary market is no longer simply a solution for difficult situations. It has become a practical tool for portfolio optimisation, liquidity management and value realisation.
For LPs, it offers a route to rebalance and generate liquidity. For GPs, it offers a way to retain high-conviction assets for longer. For companies and portfolio owners, it can also create options around externalisation, structured exits and targeted value creation.
In the current environment, and particularly for DACH-based portfolios, it is worth looking carefully at where a secondary or externalisation process could support broader strategic goals. Done well, it can provide more than liquidity. It can improve portfolio shape, create flexibility and unlock value that might otherwise remain idle.
