Once seen as a niche channel for distressed sellers, the secondary market has grown significantly over the past decade, propelled by a combination of market pressures and structural factors. In 2024, global transactions soared to a record of $160 billion, a staggering increase from roughly $50 billion in 2014. This momentum has only accelerated this year. In the first half of 2025, deal volume exceeded $100 billion, the strongest first half for the secondaries market ever recorded. Continuing on this trajectory, activity is expected to exceed last year’s totals.
Several factors lie behind the market’s expansion. Liquidity has been a central driver, drawing the most attention in recent years. Faced with one of the toughest exit droughts since the global financial crisis, LPs and GPs have leveraged secondaries to generate distributions amid sluggish M&A and IPO activity. However, the structural advantages of secondaries have gained wider recognition. Today, secondaries provide an all-weather mechanism for portfolio management, spurring activity across a broader set of use cases.
The maturation of private market asset classes — such as infrastructure, private credit, and venture — has also fueled greater secondary deal flow. Further, the portfolio-construction and risk-return benefits of the asset class has driven greater investor demand, fueling greater capital inflows.
Secondaries provide a tool to exercise active portfolio management in an otherwise illiquid asset class. For LPs, that flexibility has been especially valuable as muted distributions have strained their ability to back new vintages and pushed many beyond target private equity allocations. Here, selling portfolio stakes has offered a critical release valve for the industry’s liquidity pressures in recent years.
Beyond liquidity, LPs leverage secondaries to serve a variety of strategic portfolio objectives, such as shedding non-core positions, pivoting towards strategies where they have greater conviction, or rebalancing exposure when manager or sector concentration limits are breached. Further, when institutions undergo leadership turnover, new CIOs often turn to the secondary market to realign portfolios with a fresh investment thesis and exit legacy positions.
Ultimately, for most LPs, the secondary market has become a relative-value exercise. Investors today are weighing holding existing positions against selling at a given price and redeploying capital to potentially higher-return opportunities.
Supportive pricing has also boosted LP-led activity. The influx of retail capital pursuing diversified secondaries has compressed discounts on LP-led deals. Even amid the volatility of the first half of 2025, high-quality buyout portfolios continued to trade at tight single-digit discounts. Yale’s portfolio, for instance, reportedly priced at 91 cents on the dollar.
As a result, new entrants have been willing to bring their portfolios to market, alongside returning sellers appearing with greater frequency. Importantly, once LPs experience the benefits of secondary sales, they often become repeat participants. Therefore, as more sellers come to market, the pool of participants is likely to deepen over time, supporting higher overall activity in the long term.
Cumulatively, these dynamics have accelerated transaction volumes in recent years. Last year, LP-deal activity rose to $89 billion, and in the first half of 2025, it reached a record $54 billion, putting the market on course to surpass last year’s peak. Enhanced demand, strategic advantages, and other factors suggest these structural tailwinds are likely to continue supporting LP-led activity.
GPs have also found strategic value in the secondaries market. Once a niche fix for “zombie funds,” GP-led deals have become a mainstream tool as sponsors increasingly leverage these vehicles to retain their top-performing assets while providing LPs with exit optionality. The benefits are twofold. LPs gain the flexibility to hold or exit their stakes, while GPs can secure new capital to extend the value-creation runway for trophy companies. This ability to continue compounding returns without passing them off to another sponsor will have enduring appeal.
On the demand side, continuations funds present an attractive opportunity set, as they house GPs’ highest-quality, cash-generative businesses, reflected by the strong valuations of these assets. For example, in the first half of 2025, these transactions averaged a TEV/EBITDA multiple of 14.7x, a significant premium over the 11.7x multiple seen across the broader buyout universe.
Further, the strong risk-return profile of these assets, combined with growing competition from retail capital, has boosted appetite among traditional secondaries investors for GP-led exposure. At the same time, large buyout firms are increasingly building dedicated continuation fund strategies to access deal flow that would once have moved through the sponsor-to-sponsor channel. Together, these trends point to a GP-led market poised to build off of the significant growth in recent years.
Secondaries function as a derivative of a robust primary market. While buyouts continue to dominate secondary activity, private credit, infrastructure and venture have steadily expanded their market share, reflecting the broader growth and maturation of these asset classes. Here, the secondaries market provides LPs and GPs with a portfolio management tool to address the factors discussed above, including extended holding periods, larger allocations, and strategic objectives.
Take private credit. On both the LP- and GP-led sides, the secondaries market has become a useful tool for portfolio management. For one, while the asset class is typically shorter duration, the growing use of evergreen funds has created demand for longer-term capital, where secondaries offer a source of liquidity for LPs. More broadly, as exit avenues have become more challenging, extended holding periods have led funds to pay down fund leverage faster than anticipated.
This has left some LPs grappling with suboptimal debt-to-equity ratios, prompting a turn to the secondaries market to recalibrate credit exposures toward a more leveraged return profile. GPs have also used continuation funds in these scenarios to move suboptimal capital structures into a new fund, recapitalize, and enhance returns going forward.
Similar strategic objectives exist across infrastructure and venture. For example, risk-return profiles on infrastructure assets often shift once a project moves from greenfield development to an operational asset with contracted revenues. For LPs, secondaries provides a mechanism to rebalance infrastructure exposures across core, core plus, and value-add strategies.
Additionally, appetite for secondaries market access across these asset classes remains robust. In venture, for instance, secondaries can provide investors with access to top-quartile managers that might otherwise be out of reach through traditional fund commitments.
This rising demand is set to channel more capital into these non-buyout strategies, positioning them to play an increasingly prominent role in the evolution of the secondaries market — a shift already well underway. In recent years, infrastructure, private credit and venture secondaries have deepened their market share. That growth shows little sign of slowing. In the first half of 2025, infrastructure secondaries reached $9.1 billion and private credit $4.6 billion, putting both on track for record volumes this year.
The secondaries market is well positioned to capture significant capital flows in coming years, buoyed by several converging trends. Chief among these has been the dramatic rise in fundraising through 40 Act funds, with this capital flowing disproportionately into secondaries — particularly LP-led transactions. By the first half of 2025, secondaries commanded 41% of all retail capital raised, followed by direct and co-investments at 29%.
For retail fund sponsors, secondaries hold several attractive characteristics. They provide high-quality, risk-adjusted, and diversified private market exposure on abbreviated fund lifecycles. Further, they accommodate swift deployment. As the bulk of retail capital looks poised to sit in evergreen funds, this also offers a structural advantage. As marquee sponsors increasingly eye the retail opportunity, these benefits will likely lead to greater long-term capital flows into secondaries.
However, beyond the retail channel, secondaries have established their strategic position in private markets portfolio construction more broadly. Capital dedicated to secondaries represented 8.9% of total private capital raised in 2024, a sharp increase from just 2.7% in 2021, underscoring the asset class’s evolution from a niche strategy used to ramp up PE programs and backfill vintage diversification to a core allocation within institutional portfolios.
From circumventing blind-pool risk and providing J-curve mitigation to delivering compelling performance and lower return dispersions, secondaries offer many structural benefits as an asset class. Further, transactions occur in a fundamentally less efficient marketplace than primary markets. Assets typically trade at discounts to net asset value, creating instant upside potential, and periods of market dislocation can unlock attractive pricing more readily than in other investment strategies in the private markets.
Further, increasing sophistication and specialization within the asset class has afforded allocators customization in pursuing a secondary return profile. Investors can tailor their secondaries allocation not only across different asset classes and concentration levels, but also by sector focus and investment strategy. Some managers concentrate on tail-end portfolios where pricing discounts drive returns, while others target assets at inflection points where they are derisked but with substantial upside remaining.
These dynamics have fueled robust demand for secondaries products and, by extension, large fundraises in recent years. Alongside established secondaries investors continuing to raise substantial funds, many prominent players across private asset classes are building out dedicated secondaries platforms. These firms benefit from the network effects of leveraging existing relationships and proprietary data from their primary programs to secure superior secondaries deal flow and sharpen investment decisions.
Ultimately, the convergence of demand from retail investors, institutional allocators and sponsors coupled with enhanced fundraising will drive greater market capitalization. This in turn, will continue to contribute to sustained growth in transaction volumes as both new entrants and established players expand their market activity.
Historically, transaction volumes in traditional private equity buyout secondaries have remained within 1-1.5% of the primary market’s net asset value. This modest penetration rate has nonetheless contributed to steady growth in absolute volumes, as the industry has sustained two decades of robust NAV expansion, reaching $8.7 trillion in 2024.
While fundraising has slowed across most asset classes, the sheer volume of accumulated dry powder means NAV expansion will continue, albeit at a potentially more moderate pace than the previous decade’s rapid growth.Yet, while transaction volumes will naturally rise alongside larger NAVs, a more intriguing prospect for the industry lies in the potential for deeper market penetration. Should secondary volumes climb to say 2-2.5% of total NAV, for example, it would drive a significant step-change in market activity.
What might drive enhanced penetration rates across the secondaries market? The proportion seems set to climb as LPs oversee increasingly substantial private market programs and NAVs across asset classes, prompting more active portfolio management to optimize exposures, returns, and liquidity provisions.
Further, extended hold periods may well prove a more structural feature of private markets, extending well beyond current liquidity constraints. Should the macroeconomic backdrop remain complicated by geopolitical uncertainty, market volatility and elevated interest rates, these conditions will reinforce the appeal of longer asset ownership for general partners. In such an environment, GPs will likely grow more sophisticated in deploying secondaries to address their investors’ cash flow requirements.
Ultimately, while secondaries fundamentally serve as a liquidity mechanism and have benefited from record liquidity constraints, longer-term structural forces will continue driving growth across the asset class. The dynamics outlined here point to sustained expansion in the years ahead. Rather than marking a cyclical high-water mark, the record transaction volumes witnessed in 2024, and continuing through 2025, reflect the asset class’s evolution into an indispensable component of the private markets ecosystem.
Continuation funds are reshaping the landscape for LPs, secondaries investors, and sponsors. Our Continuation Fund Report examines how each group is navigating these vehicles, the distinct skills they require, and their unique risk-return profile. We also highlights the growing role of technology across the ecosystem in helping LPs weigh rollover decisions, easing the operational burden on sponsors, and giving secondaries investors sharper tools to track complex terms and concentrated exposures.
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