Secondary Market Hits Record $152B as Limited Partners Seek Liquidity

What's New: The private equity secondary market reached an unprecedented $152 billion in deal volume for 2024, a 21% increase from the previous record set in 2021, according to Lazard's Secondary Market Report 2024. This growth was primarily driven by a surge in GP-led transactions, particularly in the second half of the year.

Why It Matters: This record activity signals a fundamental shift in how private capital markets function, with secondaries becoming an established strategic tool rather than just a distressed exit option. The market now serves as a crucial liquidity mechanism for both GPs seeking to retain trophy assets and LPs managing portfolio allocations.

Big Picture Drivers:

• Liquidity demands from limited partners facing capital call/distribution imbalances drove significant portfolio management activity.

• Trophy assets increasingly moved into single-asset continuation funds as sponsors sought extended holding periods for prized companies.

• Retail capital through '40 Act funds created new demand sources and improved pricing across diversified deals.

• Capital formation reached record levels, with secondary funds raising unprecedented amounts and preparing for further growth in 2025.

• Exit constraints in traditional M&A and IPO markets pushed sponsors to utilize secondaries as strategic alternatives.

By The Numbers:

• $72B in GP-led transactions (48% of market), a 50% increase from 2023

• $80B in LP-led deals (52% of market), up 30% from prior year

• 87% of single-asset continuation funds priced at 90%+ of NAV

• 56% of single-asset deals closed at par or premium to NAV

• 650+ LP-led transactions completed, an 8% increase over 2023

Key Trends to Watch:

• Middle market sponsors are increasingly utilizing continuation funds to raise capital equivalent to 50%+ of their flagship fund sizes.

• Technology, healthcare, business services, and industrials represent 67% of single-asset continuation fund volume by sector.

• Pricing for growth capital and venture capital funds improved significantly, while infrastructure fund pricing declined.

• Retail capital through '40 Act funds is creating deployment pressure and premium pricing in the LP-led market.

The Wrap: 

With traditional investors, specialty funds, and retail capital all converging on the secondary market, Lazard projects continued growth to $175 billion in 2025. While M&A and IPO markets may recover, secondaries have become a permanent fixture in portfolio management strategies for both GPs and LPs.