Private markets are confronting an exit problem of growing magnitude. Given the slowdown in the IPO market and in strategic asset sales, a growing number of assets are left stranded in fund structures built to return capital on fixed timelines.
Industry estimates indicate that a considerable proportion of companies representing substantial value remain unsold.
Against this backdrop, as investors seek alternatives to traditional exits, the secondaries market is becoming an essential mechanism for managing postponed exits and reshaping liquidity within private markets, attracting steadily larger pools of dedicated capital.
S&P Global reports global private equity secondaries fundraising to have reached $92.9bn in 2025, up from $87.32bn in 2024, and $63.2bn in 2023, highlighting the strategy’s institutionalisation.Â
As large alternative asset managers aggressively expand into the secondaries market, the growth of general partner-led deals, particularly continuation vehicles, has become the defining feature of this market expansion.
These structures allow managers to transfer selected assets into newly formed vehicles, providing liquidity to existing investors while extending ownership where valuations or market conditions make a sale unattractive.
More fundamentally, we are seeing a shift away from a rigid, exit-driven model towards a more flexible system in which liquidity can be generated internally rather than relying solely on favourable external market conditions.
Redefining what ‘exit’ means
Secondaries are redefining private equity exits. Instead of traditional clear-cut outcomes such as trade sales or public listings, assets now often pass through various ownership structures that offer liquidity in stages rather than in a final realisation.
This shift requires investors to rethink performance, focusing less on the precise timing of traditional exits and more on navigating liquidity pathways when the appetite for IPOs is limited. As such, managers gain flexibility to hold valuable businesses longer if an immediate sale is not favourable.
However, this also brings greater scrutiny on deal pricing and governance — a scrutiny that is necessary, especially with GP-led deals where managers act on both sides of the deal. Investors will focus on whether processes are robust, conflicts are actively managed, and price discovery reflects economic reality, with governance standards playing a central role in sustaining confidence.
Valuation, governance, credibility
Scrutiny alone will not suffice. As holding periods extend and secondaries continue to rise, operational fundamentals move from back‑office considerations to central risks. Valuation approaches must be consistent and defensible, particularly where assets are marked infrequently and comparable data is limited. Concomitantly, governance frameworks must evolve to ensure transparency around decision-making, fee allocation, and investor options.
The surge in secondaries also intersects with the ongoing discussion about credibility in private markets. GP‑led dealmaking can protect value by avoiding forced sales and allowing assets to compound, but it can equally be misused to defer difficult decisions if conflicts, disclosure and pricing are not handled rigorously. Maintaining investor confidence will determine whether secondaries are seen as a mature liquidity solution or as a mechanism for postponement.Â
Implications for investors and portfolios
For limited partners, the practical impact is significant. Historically, closed-end funds afforded limited control over liquidity, with distributions largely dictated by exit conditions in IPO and M&A markets. The expansion of secondaries potentially introduces new avenues for LPs to access their capital without having to sell their stakes at a discount or wait for long periods before the fund sells all of its assets and liquidates.
Improved liquidity options also reshape portfolio construction as greater flexibility over vintage exposure and concentration risk reduces the likelihood of forced sales during market downturns, hence easing the pressure exit bottlenecks place on fundraising cycles. Â
For GPs, the same toolkit reduces the incentive to exit a high-performing asset simply because a fund is approaching the end of its term. In well-structured continuation vehicles, exit timing can be aligned more closely with business fundamentals rather than dictated by the calendar.
A new liquidity paradigm
Secondaries are unlikely to retreat to the margins. If exit markets remain uneven and asset holding periods continue to lengthen, demand for engineered liquidity will persist.
The critical question is whether the market can scale while sustaining robust standards of valuation, governance, and transparency.Â
If that balance holds, secondaries will be more than just a supplement to traditional exit routes. They will potentially redefine how time, liquidity, and capital recycling are managed in private markets.
René Paulussen is alternatives leader at PwC Luxembourg