M&A Talk: #1 Podcast on Selling a Business
For Professionals: Navigating the Complex World of Private Equity Secondaries
Aug 12, 2024
Jeff Bollerman, a seasoned expert in the aftermarket for private equity interests, dives into the rapidly evolving secondary market. He explains how investors can buy and sell stakes, transforming a once 'black market' to a more legitimate sector. The conversation touches on the growing importance of professional advisors and the fierce competition among large funds. Bollerman also discusses the complexities of valuations, due diligence, and the potential impact of political changes on the future of private equity investments.
52:18
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Quick takeaways
- The private equity secondary market has evolved from a 'black market' to an accepted practice, offering liquidity options for investors seeking early exits.
- The increasing sophistication of private equity firms, particularly through consolidation strategies, drives operational efficiencies and enhances returns amidst rising competition.
Deep dives
Understanding the Secondary Private Equity Market
The secondary private equity market functions as an aftermarket for private equity interests, allowing investors to sell their stakes before the typical 10-year fund lifespan ends. This market arose as investors sought liquidity options, deviating from their original commitments due to changing financial needs or preferences. Initially considered a 'black market' due to its informal nature, it has evolved into a more accepted practice among general partners, with a growing acceptance of interim liquidity requests from investors. This acceptance is evidenced by the annual transaction volumes, which now reach substantial figures in the billions.
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