Secondaries Are Becoming Private Markets’ Price Discovery Engine

Secondaries are becoming more important because they bring live price formation into a market that has long relied heavily on model-based valuations. Each transaction forces buyers and sellers to negotiate around asset quality, duration, governance, and risk, which makes pricing more grounded in actual demand. That matters for private markets because it improves valuation discipline, gives allocators better signals, and makes portfolios easier to assess in real time. Over time, secondaries are doing more than solving for liquidity. They are helping build a more credible pricing layer inside private markets.

Why this matters

Private market valuations are often criticised for being slow to adjust, heavily model-driven, or too dependent on manager marks. That criticism exists for a reason. Private assets are not continuously traded, and valuation frameworks still rely on comparables, assumptions, and internal judgement. But that view misses an important shift underway inside private markets themselves. Secondaries are increasingly becoming the mechanism through which prices are tested in real transactions rather than inferred on paper.

That shift matters because secondaries are becoming a live pricing layer within private markets. They bring buyers and sellers into actual negotiations around quality, duration, governance, and risk. In doing so, they generate something private markets have historically had in limited supply: transaction-based price discovery.

In 2025, global secondary volume reached $240 billion, up 48% year on year. Secondary transactions are now producing observable pricing outcomes across strategies, fund vintages, and geographies. That is what gives the market its growing relevance. Prices are being discovered in transactions, not simply carried forward through valuation models.

Why price discovery matters so much in private markets

In public markets, prices are continuously formed through trading. In private markets, that process is far less frequent. When it does happen, it carries more informational value.

Transaction-based price discovery matters because it imposes discipline. It reduces the room for valuation complacency. It pushes managers toward stronger reporting and clearer communication. It helps allocators compare assets and strategies more intelligently. And it improves portfolio construction by making valuations more responsive to what buyers are actually willing to pay in the market.

That is the more useful way to think about secondaries. They are helping private markets become more investable because they are making valuations more grounded in transactions.

Time is becoming part of price formation

Secondaries are also showing that time matters in private market pricing. Fund age influences how buyers assess a portfolio’s remaining path to value creation, liquidity, and realisation.

Younger funds usually offer more runway. There is often more time for value creation, greater flexibility around exit timing, and a wider range of possible outcomes. Older funds present a different set of considerations. Portfolios can become more concentrated over time, realisations may take longer, and the range of remaining pathways can narrow.

What matters here is that these differences are being expressed through real transactions. That makes secondaries more informative than model-based valuation alone. The market is not just evaluating the assets in a portfolio. It is also evaluating how much time, flexibility, and execution opportunity still sit around them.

This is one of the clearest signs that secondaries are strengthening price discovery in private markets. They are helping turn duration and optionality into something tested in actual deals rather than assumed on paper.

Geography is shaping price formation too

Geography is also becoming part of how private market value gets discovered. Regional markets differ in buyer depth, reporting quality, legal enforceability, structural protections, concentration, macro conditions, and FX exposure. Those differences affect how transactions get evaluated and cleared.

That is what makes secondaries useful. They show that price formation in private markets does not happen in a vacuum. It is shaped by the surrounding market structure as much as by the asset itself. Where disclosure is stronger, buyer participation is deeper, and governance standards are more established, transactions tend to carry greater valuation clarity. Where those conditions are still evolving, price formation is naturally more cautious and more complex.

The important point is that these differences are being expressed through actual transactions. That gives the market more credible signals than paper-based valuation alone. Over time, as market infrastructure strengthens, disclosure improves, and participation broadens, regional price formation should become deeper and more consistent.

Secondaries are becoming a governance discovery mechanism too

The price itself is only part of the story. Secondary transactions also force governance questions into the open. How reliable are the underlying marks? How robust is GP reporting? What conflicts exist, and how are they managed? What is the fee burden over the remaining life of the asset? Are valuations supported by operational evidence and comparable outcomes, or mainly by assumptions?

As secondaries scale, these questions become harder to avoid. That is constructive for the ecosystem. Managers know their portfolios can be tested through actual transactions, which creates stronger incentives for discipline, transparency, and process quality.

Why this matters for India

India’s private markets are growing in scale and complexity. As they do, the need for credible transaction-based pricing will grow with them.

That is where secondaries can play a useful role. They can encourage stronger reporting and more consistent governance. They can create portfolio rebalancing routes that do not depend entirely on IPO cycles. They can reduce the tendency for illiquid pockets of the market to rely too heavily on model-based comfort. And they can improve investor confidence by showing how assets are actually being priced when capital changes hands.

The relevant lesson for India is not to import global secondaries structures mechanically. It is to build the conditions that allow transaction-based price discovery to work well. That includes better transparency, more standardised reporting, enforceable legal structures, strong conflict management in GP-led transactions, and clearer disclosure around maturity and exit pathways. If those ingredients develop alongside market growth, secondaries can help make private markets more resilient and more credible.

The real shift underway

It is common to say that private markets lack price discovery. That has long been true relative to public markets. But that does not mean private markets must remain dependent on paper-based valuation alone.

Secondaries are changing that. They are creating a layer of live price formation inside an otherwise infrequently traded market. They are forcing valuations to be tested in real transactions. That is the real significance of secondaries today. They are not just solving for liquidity. They are helping private markets become easier to price because they are making them harder to treat as purely model-driven. That is a meaningful shift, and a healthy one.

Bottom line

The real significance of secondaries is that they are making private markets easier to price through actual transactions rather than paper assumptions alone. That improves discipline, sharpens governance, and gives investors a clearer sense of what assets are worth when capital changes hands. For India, the opportunity lies in building the conditions that make this pricing layer more credible: better disclosure, stronger reporting, cleaner legal structures, and better conflict management. If that happens, secondaries can do more than add liquidity. They can make private markets more transparent, more resilient, and more investable.

Brand Manager

Aayushi Thakur

Frequently Asked Questions

Q: What is price discovery in private markets?

A: Price discovery in private markets is the process through which actual transaction activity reveals what assets are worth, instead of relying only on model-based valuations or manager marks.

Q: Why are secondaries becoming important for price discovery?

A: Because they create real transactions in an otherwise illiquid market, helping buyers and sellers test valuations against actual demand.

Q: Why does pricing vary so much across strategies?

A: Because different strategies carry different levels of cash flow visibility, duration risk, governance quality, and exit clarity.

Q: Why do younger funds price better than tail-end funds?

A: Younger funds usually offer more runway, stronger GP attention, and greater upside optionality, while older funds often face concentration risk and slower realisations.

Q: How do secondaries improve governance in private markets?

A: They force closer scrutiny of valuation practices, GP reporting, fee drag, conflicts, and exit assumptions, which can improve discipline across the ecosystem.

Sources

1. McKinsey, Global Private Markets Report 2026
2. Jefferies, Global Secondary Market Review, January 2026