Private Equity Secondaries

A private equity secondary is the sale of an existing private fund interest, or of fund portfolio companies, to a new buyer rather than a return of capital through the fund's own exits. Two structures dominate: LP-led transactions, in which an investor sells its own stake, and GP-led transactions, in which the fund's sponsor initiates the sale. Evercore classes continuation vehicles, GP-led preferred equity and tender offers as GP-led and LP portfolio sales as LP-led (Evercore, H1 2026 Secondary Market Review, July 2026).

Reviewed by José Vasquéz, Managing Partner

Mechanism

In an LP-led transaction, a limited partner sells all or part of its interests in one or more funds to a buyer, and the funds and their managers carry on unchanged. The price is quoted as a percentage of net asset value (NAV). Jefferies reports that average pricing for LP portfolios was 87 percent of NAV in the first half of 2026 (Jefferies, Global Secondary Market Review, July 2026).

The sale is restricted: the ILPA Model Limited Partnership Agreement requires the general partner's prior written consent to a transfer, not to be unreasonably withheld if the buyer is an affiliate or stated conditions are met (ILPA, Model LPA, § 17.2.1), and fund agreements may add a right of first refusal (Duane Morris, Transfer of Limited Partnership Interests, February 2015).

In a GP-led transaction, the sponsor moves one or more portfolio companies out of an existing fund and into a new vehicle, called a continuation vehicle, and lets existing investors sell, roll into the new vehicle, or do some of each (ILPA, Continuation Funds, May 2023). ILPA says rolling investors must also be offered a "status quo" option, participation in the new structure with no change in economic terms; its 2019 guidance notes that a no-transaction option is not typically offered.

The new vehicle is typically managed by the original fund's sponsor (ILPA, GP-led Secondary Fund Restructurings, April 2019), so the sponsor sits on both sides. Single-asset vehicles made up 68 percent of continuation vehicles in the first half of 2026 and multi-asset vehicles 32 percent (Jefferies, July 2026).

Figure. Direction of flows in LP-led and GP-led secondaries. Sources: Jefferies, Global Secondary Market Review (July 2026); ILPA, Continuation Funds (May 2023).

The SEC's 2023 private fund adviser rules required an adviser conducting an adviser-led secondary transaction to obtain a fairness opinion or valuation opinion (Release IA-6383, August 23, 2023, adopting 17 CFR 275.211(h)(2)-2). The Fifth Circuit vacated those rules on June 5, 2024 in National Association of Private Fund Managers v. SEC, No. 23-60471, and the SEC's published notice lists Rule 211(h)(2)-2 among the vacated rules, so the requirement is not in effect.

Jefferies reports global secondary volume of $240 billion in 2025 and $118 billion in the first half of 2026, of which GP-led volume was $62 billion, or 53 percent, the first GP-led majority since 2021 (Jefferies, July 2026). Evercore, which surveys more than 100 active buyers, reports more than $226 billion for 2025 and $121 billion for the first half of 2026 (Evercore, H1 2026 Secondary Market Review, July 2026).

Worked Example

Take a hypothetical $100 million fund. In an LP-led sale, an investor holding an interest with a NAV of $10.0 million sells at 87 percent of NAV, the Jefferies all-strategy average for the first half of 2026. The price is 0.87 × $10.0 million = $8.7 million, a discount of $1.3 million.

In a GP-led sale, suppose the sponsor moves one portfolio company, carried at $40 million, into a continuation vehicle at that value. An investor holding 10 percent of the fund has a pro rata claim of 0.10 × $40 million = $4.0 million, ignoring fees and carried interest. The investor may take the $4.0 million in cash or roll it into the new vehicle. ILPA's stated principle is that a rolling investor should be no worse off than if the transaction had not occurred (ILPA, May 2023).

What It Means for a Limited Partner

A secondary gives an allocator a way to sell and, in GP-led processes, a decision to make. A seller trades price for time. Annual distribution yield from LP portfolios stayed near 10 percent in the first half of 2026, against a 25 percent historical average since 2001, and 45 percent of LP sellers sold to generate liquidity; funds ten or more years old priced at discounts of 25 percent or more (Jefferies, July 2026).

As a holder asked to elect in a GP-led process, the investor makes a roll-or-sell decision on a single asset rather than on a manager. ILPA recommends at least 30 calendar days or 20 business days to decide, notes that windows have been as short as 10 days, and recommends that a non-responding investor be treated as selling, because investors should never be forced to roll. ILPA also recommends no higher fees, carried interest or lower hurdle for rolling investors, no crystallization of carried interest, and an advisory committee vote on the conflicts (ILPA, May 2023).

In Life Sciences and Healthcare

Healthcare is a growing share of GP-led volume: Evercore's sector chart shows healthcare at 13 percent of GP-led volume in the first half of 2026, against 10 percent in 2025 (Evercore, July 2026). Jefferies reports that, as software transactions slowed, healthcare and other sectors absorbed much of the displaced volume, and that in GP-led buyout transactions investor demand concentrated around business services, infrastructure and healthcare companies with resilient operating characteristics, defensive end markets and recurring revenue (Jefferies, July 2026).

Venture trades differently. Jefferies reports venture LP portfolios at 79 percent of NAV against 91 percent for buyout, and Evercore puts venture secondary volume at about $5 billion for the half, split evenly between GP-led and LP-led transactions, with demand concentrating in AI and adjacent platforms.

Governing Authority and Sources

SEC, Release No. IA-6383 (August 23, 2023), 88 Fed. Reg. 63206; 17 CFR 275.211(h)(2)-2.
SEC, Announcement Regarding Private Fund Advisers Rules (vacatur, 5th Cir. June 5, 2024).
ILPA, Continuation Funds: Considerations for Limited Partners and General Partners (May 2023).
ILPA, GP-led Secondary Fund Restructurings (April 2019).
ILPA, Model Limited Partnership Agreement (whole-of-fund version), Article 17.
Duane Morris, Transfer of Limited Partnership Interests (February 2015).
Jefferies, Global Secondary Market Review (July 2026).
Evercore, H1 2026 Secondary Market Review (July 2026).

Frequently Asked Questions

What are secondaries in private equity?

Secondaries are sales of existing stakes in private funds, or of portfolio companies, to a new buyer. They divide into LP-led sales, where an investor sells its stake, and GP-led transactions, where the sponsor initiates the sale. Jefferies reports $118 billion of volume in the first half of 2026, 47 percent LP-led and 53 percent GP-led.

What is a continuation fund?

A continuation fund, also called a continuation vehicle, is a new vehicle to which a sponsor moves one or more portfolio companies from an existing fund. Existing investors may sell for cash, roll into the new vehicle, or do some of each, while new investors fund the purchase. Jefferies reports that single-asset vehicles were 68 percent of continuation vehicles in the first half of 2026.

What is a GP-led secondary?

A GP-led secondary is a transaction initiated by a fund's sponsor, such as a continuation vehicle, that lets existing investors sell or roll. The sponsor sits on both sides of the sale, so ILPA recommends that the advisory committee vote on the conflicts. Jefferies reports GP-led volume of $62 billion in the first half of 2026, up 32 percent from the first half of 2025.

Pillar: Growth Equity. See also The Illiquidity Premium, Distributions to Paid-In Capital (DPI), and Co-Investment.