For many years, I’ve had the habit (good or bad, depending on how you look at it) of starting my day by reading from multiple industry news sources. I’m no money manager, but understanding the strategies, pressures, and language of our clients helps me serve them better. One topic has surfaced in the headlines more frequently this year than in the past few years: Secondaries—the buying and selling of LP positions in closed-end funds.
In fact, it’s hard to remember a time when secondaries were discussed this frequently. A recent report by Jefferies noted that secondary volume surged 51% to $103B in the first half of 2025. High-profile transactions like Yale University’s $2.5B sale of positions, the New York City pension system's $5B portfolio sale, and Harvard reportedly seeking to sell $1B in positions show just how mainstream these activities have become among sophisticated allocators.
This raised my curiosity: What’s actually driving both sides of these transactions? And more importantly, what happens after the dust settles?
The simple story is that LPs are seeking liquidity. Many private positions have been held for 5, 7, even 10+ years, far longer than originally anticipated. Whether to rebalance after years of denominator effect distortions, fund new commitments, or simply reduce exposure to aging vintages, LPs are increasingly turning to the secondary market. It’s essentially out with the old, in with the new.
But this trend feels structural, not just cyclical. Longer fund durations, slower distributions, and more complex continuation fund structures mean LPs are using secondaries as an ongoing portfolio management tool, not just an emergency exit.
2. Buyers See Opportunity
On the other side of the table, buyers are drawn to the prospect of acquiring positions at a discount to NAV, with the added benefit that many of these funds are in the later stages of their lifecycle. That means a shorter time horizon to liquidity and, potentially, attractive risk-adjusted returns. The secondary market itself has also matured. Dedicated secondary funds have raised record amounts of capital, bringing more efficiency, competition, and sophistication to pricing.
From an administration perspective, the mechanics of processing a secondary transfer are relatively straightforward. We confirm that the fund’s Manager has approved the transfer (as not all LPAs allow sales/transfers), process the appropriate documentation, perform AML and due diligence checks on the incoming investor, and update the share register.
At the risk of angering my team, I’ll admit I’m simplifying for the sake of this piece, but in general, it's a repeatable process, however, as volume grows, the operational burden grows with it. Questions arise around timing, documentation, AML cycles, and coordinating among managers, LPs, legal counsel, and auditors. Older LPAs often lack clear guidance for modern secondary activity, forcing everyone to interpret best practices on the fly.
This is the question that always sits at the back of my mind: After a secondary sale, how should that position be valued for future reporting?
Reasonable minds differ. Some argue that NAV should remain the primary reference point, as GPs (not the market) are responsible for determining fair value under accounting standards. Others argue that ignoring a real, observable trade price distorts transparency. As secondary volume grows, this debate will only intensify. The market has shifted, but fund documents have not always shifted with it.
That’s why I believe it may be time for Managers of closed-end vehicles (and their advisors - legal, audit, administrative, etc.) to address this issue up front when establishing a new fund. Clear valuation language in governing documents would go a long way toward avoiding ambiguity for all parties involved.
The rapid growth in secondaries (both LP-led and GP-led) signals a fundamental change in how private markets operate. What once was occasional and opportunistic is becoming routine. LPs are managing private portfolios more dynamically, and GPs are extending hold periods through continuation structures that further blur old norms.
As this evolution continues, Managers, LPs, auditors, and administrators will need to align on governance, documentation, valuation, and operational workflows that match the realities of today’s market.