BLOG. 2 min read
The biggest growth drivers for the secondary market include constrained exit markets, the increasing role of GP-led transactions, and the natural churn of LP capital due to past fundraising cycles. High interest rates have slowed traditional exits, reducing liquidity for LPs and pushing them toward secondaries. At the same time, GPs are leveraging secondary transactions to retain high-value assets, while record fundraising from previous years has created a backlog of commitments now entering the secondary market.
We recently explored this growth in a webinar, where we polled our audience on their predictions for 2025. The majority anticipate continued expansion, with 46% predicting that secondary volumes will increase significantly and 43% expecting moderate growth.
As secondary transactions become more prevalent, their operational complexity also increases. These deals require extensive data analysis, particularly for diversified LP portfolios. Historically, this process was manual and labor-intensive, requiring significant resources. When asked about their infrastructure needs, 74% of our audience reported that secondary transactions demand a more sophisticated operational infrastructure than primary private equity investments.
Advancements in technology, particularly AI, are transforming the industry by automating data extraction and analysis. Secondary transactions often involve evaluating large portfolios rather than individual assets, necessitating robust systems to assess investment exposure across sectors and geographies. Firms with well-developed data capabilities have a distinct advantage, while those with less sophisticated infrastructure may struggle to keep pace. To manage growing transaction volumes, 57% of our audience reported they have enhanced their data management strategies.
As the secondary market continues to expand, firms must prioritize investment in technology, data infrastructure, and operational efficiency. The ability to process complex transactions quickly and accurately will be a key difference in shaping the competitive landscape in the years ahead.
Download the "The Secondary Market" report to learn more about the growing complexity of the secondary market.
