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Private equity is playing chess against itself. It is selling its best assets to a fund it also controls. |
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One Number
GP-led secondaries (continuation vehicles) accounted for 14% of all sponsor-backed PE exits in 2025. Jefferies 2025 Global Secondary Market Review One in seven sponsor-backed PE exits in 2025 never touched an outside buyer. |
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One Argument Private equity has built its own exit market. It doesn’t need a buyer any longer.For investors “an exit” means selling a company or a stake in a company outside the fund - to another sponsor, a strategic acquirer, or to the public market via an initial public offering. Over the past three years, GP-led secondaries have grown from a marginal liquidity tool into a full-fledged parallel exit channel that barely existed before. Selling to secondaries is a different kind of transaction than a liquidity sale. Instead of being spread across the portfolio these deals are increasingly concentrated on a sponsor’s single best asset. According to Jefferies, single-asset continuation vehicle (CV) deals exceeded 50% of total CV volume for the first time in 2025. At the current scale this approach has stopped being a side-channel and has become a mainstream share of how PE firms exit their investments. This has made a profound change in what “performance” and “exit” actually signal to an outside investor. A GP no longer depends on an M&A window or an IPO market. It can manufacture its own liquidity event on its own schedule and at its own convenience. A GP now sits on both sides of the trade — selling as a manager of the old fund, buying as a manager of the new vehicle, and setting the net asset value the deal is priced against. Dedicated secondaries dry powder has reached $327 billion in 2025, according to Ropes & Gray, deepening the pool of buyers competing for these deals. Buyout secondaries were priced at 94% of net asset value in the first half of 2025, the highest level in years, according to Jefferies. That narrows the gap between what a GP says an asset is worth and what the market will actually pay.
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One Position You can no longer take the word “exit” at face value when evaluating a private equity manager’s realised performance. The practical move is to ask, deal by deal, which exits were sales to an unrelated third party and which were the GP selling to itself. This position reverses if GP-led secondaries volume falls back toward pre-2022 level of $48 billion, according to Evercore. That would mark a temporary liquidity adaptation to a frozen exit environment, not a permanent restructuring of how PE exits its investments. If your money is in private equity — do you know whether your manager's last 'exit' was a sale to a third party, or to themselves? |
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