In 2024, the secondary market reached unprecedented levels of activity, with $87 billion in LP volume and $75 billion in GP-led transactions. The LP secondary market’s growth is especially noteworthy, with 27 transactions worth over $1 billion closing in 2024, compared to just 19 the previous year. This shift reflects an increasing reliance on secondaries as a portfolio management tool. As more sellers enter the market—40% of whom were first-time participants in 2024—NAV discounts have decreased from 85% to 89%. 2025 could see LP secondary volume surpass $100 billion.

Where We Are Headed

The secondary market is on track to become even more important in the coming years. With increasing transaction volume, new sources of capital, and greater competition, this market is transforming into a more robust option for investors looking for liquidity and better portfolio management. It is likely to continue growing as both LPs and GPs seek more efficient ways to handle their portfolios.

• LP secondary volume could exceed $100 billion in 2025.
• The GP-led market saw a 44% increase in 2024, driven by continuation vehicles.
• ‘40 Act funds are entering the space, adding liquidity and driving prices higher.

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What's Holding Us Back

Despite recent growth, several factors could limit the pace of the secondary market’s expansion. A shortage of high-quality assets, ongoing challenges in hiring skilled labor, and limited technology to process large amounts of data required for trade decisions are all potential obstacles. Additionally, the complex regulatory landscape could slow down the market’s development.

• Limited high-quality assets for sale could hinder deal flow.
• Talent shortages are slowing down deal-making and market expansion.
• Limited use of technology and AI to speed up data-to-decision cycles.
• Regulatory complexity, particularly around GP-led transactions, could create barriers.

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How Technology Will Speed Up Transaction Cycles

With this surge in market activity, GPs and LPs will face increasing pressure to make quicker, more informed decisions. Embedded AI and cloud-based workflows can play a key role by providing tools to manage market complexity and speed. The growing volume of transactions, particularly with continuation vehicles and secondary sales, demands real-time monitoring, accurate valuations, and detailed reporting. Modern technology streamlines these processes with AI, analyzing large datasets, tracking performance, and providing insights that help firms respond quickly to market changes.