Meena A. Gandhi
Head of Business Development and Investor Relations for PEG
Published:
In brief
- The secondary market reached a new high in 2025, with annual transaction volume exceeding $225 billion, up 41% from prior year record.
- Secondaries are now central tools for portfolio management, helping LPs rebalance and generate liquidity, allowing GPs to retain key assets amid subdued IPO/M&A activity and providing experienced asset managers with exposure to new GPs by creating unique deal structures.
- Growth is supported by favorable pricing for quality assets and increased dry powder from evergreen vehicles and new entrants, which account for 18% of near-term fundraising, expected to still fall well short of supply going forward.
- Expansion is expected to continue into 2026, as ongoing portfolio rebalancing, a tighter bid-ask spread and evolving structures support increased transaction activity and enhanced liquidity across the market.
Market volume and pricing trends
The secondary market experienced a remarkable surge in 2025, with transaction volumes reaching all-time highs and projections pointing to continued growth into 2026, even more impressive when compared to what was previously an annual record in 2024. This momentum has been driven by investors’ proactive approach to liquidity during an extended distribution drought. Limited partners (LPs) have increasingly entered the secondary market as first-time sellers, seeking to create liquidity and offset the unpredictability of primary fund cash flows, as well as help facilitate resulting portfolio allocation changes across illiquid PE holdings. At the same time, General partners (GPs) have expanded their use of continuation vehicles (CVs), which some project to represent ~20% of distributions in 2026 as LPs overwhelmingly opt to sell rather than roll their interests. These trends have made secondaries a foundational tool for portfolio management, enabling both LPs and GPs to rebalance holdings, manage risk and access liquidity amid a subdued traditional exit environment.
Pricing dynamics have supported market growth, with high-quality assets—particularly younger vintage buyout portfolios—consistently trading at tight spreads to latest reported NAVs. In contrast, tail-end portfolios continue to transact at wider discounts, reflecting a bifurcation in investor appetite with a premium placed on asset quality. The potential for earlier distributions also makes secondaries increasingly attractive as a base layer in private market portfolios. Currently, secondary market transactions account for less than 5% of total global private market activity, indicating significant room for further expansion.
Market participation: Evergreen expansion and private wealth
The composition of participants in the secondary market is undergoing a notable evolution, with evergreen vehicles now emerging as a significant source of capital. This shift is largely driven by increased fundraising across private wealth channels, as individual and non-traditional investors seek greater access to private market opportunities. Additionally, as public markets have recovered, institutions have been able to recommit new capital to private strategies, contributing to a healthier fundraising environment and deepening the pool of available dry powder.
The influx of new entrants and the expansion of evergreen vehicles are intensifying competition for high-quality assets and encouraging innovation in deal syndication and execution. Managers are differentiating themselves through speed, certainty and tailored solutions, while the growing presence of individual investors and non-traditional buyers is expected to have a lasting impact on the market. These changes are driving greater transaction diversity, supporting liquidity and fostering the development of new structures and platforms that cater to a wider range of investor needs. As the market continues to adapt, enhanced flexibility and optionality for both buyers and sellers are expected to further solidify the secondary market’s role as a strategic tool for portfolio management and liquidity, as well as drive increased transaction volumes going forward.
Outlook for 2026: Continued growth and opportunity
Looking ahead, the foundation is set for further expansion in 2026. The combination of stabilized valuations, accessible leverage and renewed investor optimism is expected to support ongoing activity. Sponsor-led transactions are likely to remain a key feature, as managers continue to utilize creative solutions to manage portfolios and unlock value. The small and lower mid-market segments are positioned to benefit from improved liquidity and a wider range of exit options, while the secondary market’s adaptability and scale offer investors a compelling avenue for portfolio management. With innovation cycles in technology and health care accelerating, and capital formation channels broadening, the opportunity set for selective and disciplined investors continues to grow.