Secondaries (Secondary Sale)
The sale of an existing stake in a private equity fund or portfolio company to another investor, instead of the sponsor's usual exit route of a sale or IPO.
A secondary sale trades an existing private equity position rather than creating a new one. The two common forms are an LP-led sale, where a limited partner sells its stake in a fund to another investor, and a GP-led deal, where the sponsor moves one or more portfolio companies into a new vehicle so it can give some investors liquidity while continuing to hold the assets.
Secondaries have grown into one of the largest sources of private equity liquidity precisely because traditional exits (a sale to a strategic buyer, an IPO) have been slow to materialize. Because a secondary sale requires a buyer and seller to agree on a price, it also produces real price discovery: what a stake actually trades for, not just what it is marked at.