The Case for Strategic Secondaries in Private Markets

Secondaries have quietly evolved from backroom liquidity deals to strategic tools in modern portfolio construction. Global secondary transaction volumes are setting new records, having hit $162 Bn in 2024. Yet adoption still lags with most investors still sitting on the sidelines. According to SVB’s H1 2025 report, 73% of investors have not participated in secondaries.

That gap is striking not because of access barriers – most investors today have more pathways into private markets than ever before, but because secondaries remain misunderstood.

What’s holding investors back might have less to do with access, and more with how secondaries are still seen. Even as secondaries move from fringe to front-page, they’re still weighed down by outdated thinking – relics of a different cycle and a bygone market context.. And for long-term allocators like family offices and UHNWIs, clinging to these old frameworks could mean missing a structurally superior entry point into private markets.

This hesitation is not unlike the early skepticism around venture capital or emerging markets decades ago. What feels unfamiliar often gets mislabeled as risky, when in reality it may simply be underexplored.

The result of this misconception is a behavioral lag. While the ecosystem evolves with GPs launching continuation funds, LPs getting smarter about pricing, and platforms streamlining secondary transactions, the perception gap remains. That’s where the friction lies.

So let’s reframe the conversation.

There’s a persistent belief that secondaries are simply about early investors cashing out. The implication: if someone’s selling, something must be wrong. This myth misses the nuance of the asset class. Secondaries don’t exist because a company is underperforming. In reality, most secondary transactions are about timelines, not weakness. They exist because early investors, fund structures, or founders reach the end of their cycle.

Think about the architecture of private markets: fund structures are time-bound, not always opportunity-bound. Investors have mandates. Institutions have rebalancing needs. Founders, too, often have personal liquidity goals that don’t align with an IPO timeline. These aren’t signs of fragility, they’re signs of maturity.

In fact, secondaries are increasingly where top-tier GPs and global allocators go to find conviction-stage opportunities in companies that are already scaling. These are not distressed sales. They’re strategic windows into high-quality assets that just happen to be misaligned with someone else’s liquidity needs.

In other words, the seller’s reason for exiting has very little to do with the buyer’s potential for upside. That asymmetry is exactly what makes the secondary market so compelling.

It’s also what makes them efficient. The buyer gets transparency, performance history, and governance visibility, crucial tools that reduce guesswork and tighten underwriting. In a world where informational advantage is narrowing, secondaries offer clarity.

Then there’s the idea that secondaries are “too late.” That the real value has already been created, and that the upside is over. In reality, secondaries offer visibility, governance, and upside, all with less blind pool risk.

Many of these companies are entering their steepest growth curves, not exiting them. They’ve de-risked product-market fit, have established revenue channels, and are doubling down on operational efficiency. For allocators, this stage combines the clarity of maturity with the upside of scale.

In the secondary window, particularly pre-IPO, companies are often expanding margins, institutionalizing governance, auditing cash flows, and finalizing IPO timelines.

This isn’t the post-growth plateau. This is where risk is clearer, visibility is higher, and scale is proving itself quarter by quarter. An investor gets to be past the idea stage, but still early enough to benefit from meaningful multiple expansion.

It’s a unique blend of downside protection and upside access, especially in a market where both are hard to come by in the same asset.

Lastly, secondaries are too often seen as opportunistic rather than strategic, a reaction to market dynamics rather than a pillar of portfolio construction. But today, some of the most sophisticated family offices are doing the opposite: baking secondaries directly into their long-term allocation model to bypass the J-curve, access quality assets at potential discounts, enhance governance, and reduce blind pool risk.

In a world where alpha is harder to find, and timing risk is real, secondaries offer something rare: the ability to time the entry without compromising on asset quality.

Secondaries are not about chasing leftovers or acting reactively. They are structured alpha: access-based, pricing-based, timing-based, and governance-based.

This is especially critical for allocators seeking resilience across market cycles. When capital markets tighten or exit windows narrow, secondaries offer agility. When primary markets heat up, they offer access to deals that may have been missed the first time around. Either way, they build flexibility into portfolios.

In a market where entry price, governance quality, and time horizon increasingly define outcomes, secondaries offer an unusual edge, the ability to be early with insight, not just early with hope.

And that edge is compounded when you consider portfolio design at the top level. Strategic secondaries allow allocators to layer exposures by vintage, sector, and growth stage, all the while retaining optionality. In a space where rigidity can limit returns, secondaries introduce a new kind of dynamism.

More importantly, they give allocators a tool to stay invested without being overexposed, an increasingly valuable posture in a world of overlapping risks.

For family offices that want to play offense in the private markets but without sacrificing liquidity discipline, secondaries are no longer optional.

They are the smartest way to be in the right deal, at the right time, under the right terms.

As capital markets evolve and liquidity windows become more dynamic, secondaries aren’t a fallback. They are a forward move designed for investors who want to stay close to the action without getting caught in early-stage volatility.

If you’re exploring how secondaries are maturing in India, dive into Secondaries in India: What Does the Future Hold?, The Secret Life of Secondaries, The Global Secondaries Market & A Preview of India’s Trajectory to see how liquidity is getting redefined.

Frequently Asked Questions