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.