The Secondary Market Boom: GP-Led Deals, LP Liquidity, and the Tech Tools Redefining Private Equity

Private equity secondaries are undergoing a renaissance of sorts.

Once considered a niche liquidity tool, they’ve emerged as a strategic lever, facilitating longer holds, optimizing portfolios, and unlocking capital in ways the market is only beginning to fully appreciate.

The data appears to reflect it: record volumes, broader adoption, and a shift in how both GPs and LPs approach lifecycle management.

This isn’t just about exits, either, though. It’s about optionality, offering investors a path to balance diversification and duration on their own terms.

The implications? Still taking shape. The momentum? Undeniable.

This sector is increasingly recognized as a distinct asset class in investment management. So what’s next? Can this upward trajectory continue?

Well, so far in 2025, the answer appears to be a resounding “Yes”, as the market has already hit major milestones with Ardian’s new $30bn secondaries fund, becoming the largest secondaries fund ever raised.

It dwarfs Blackstone Strategic Partners' Fund IX, which closed at $22.2 billion in January 2023, and Lexington Partners' $22.7 billion fund which closed in January 2024. 

This a powerful signal of how big this sector has become, despite economic and geopolitical headwinds in recent years.

Vladimir Colas, Ardian’s executive vice-president, projects more than $150bn in potential secondary investments this year.

This bullish sentiment reflects not just a continued appetite for liquidity, but also the growing popularity of continuation funds and GP-led deals, as we discussed previously.

It also offers new opportunities for co-investment and buyout strategies.

Why Do Secondaries Matter?

For Limited Partners (LPs), secondaries can gain access to liquidity that might otherwise be locked in illiquid, multi-year investment horizons.

This affords flexibility in times of economic uncertainty, market conditions that display increasing volatility, while also allowing efficient allocation of capital.

Secondary transactions also offer an alternative to traditional primary fund or primary investments routes.

Meanwhile, for General Partners (GPs) and experienced fund managers, these transactions can extend hold periods for top-performing assets or inject new capital into otherwise mature portfolios.

This allows GPs to maximize value while mitigating risk and generating more predictable cash flows.

This, in turn, often leads to improved Net asset value (NAV) figures and enhanced net asset value assessments, both critical for sound asset management.

Broadly speaking, NAV is the value of an investment fund determined by subtracting its liabilities from its assets.

This shift has spawned a more complex regulatory environment, one in which compliance (KYC/AML) and investor onboarding play increasingly critical roles.

Platforms like Vestlane are stepping up to address these emerging complexities, offering tools to streamline everything from anti-money laundering checks to subscription document workflows for fund interests and capital calls.

Understanding the Secondary Market

What Are Private Equity Secondaries?

Private equity secondaries refer to the buying and selling of existing interests in private equity funds or direct investments, rather than committing to a primary fund or primary investments at inception.

Foregoing blind pool risk (when investors don't know the eventual contents of their investment when they invest), secondary investors can purchase positions from LPs who want to exit early—or from a GP who is in the process of restructuring a fund to hold assets longer.

Historically, secondaries were seen as a niche part of the market.

But they are now a mainstream strategy for many private equity firms that aim to mitigate risk in public market downturns.

Private market secondaries saw strong growth in 2024, with global transaction volume hitting $162 billion—up 45% from 2023 and beating the previous record of $132 billion set in 2021, according to CAIS.

Deals are now more innovative, with GP-led secondaries and the rise of continuation funds fuelling further expansion and creating compelling investment opportunities.

LP-Led vs. GP-Led Secondaries

As the private equity secondaries market evolves, two distinct deal types have come to define how capital moves: LP-led and GP-led transactions.

While both serve as tools for liquidity and portfolio management, they differ in structure, purpose, and impact.

Here's a quick breakdown of what sets them apart:

1. 	Definition
   LP-Led Secondaries	LPs sell their fund stakes to third parties, often as part of broader fundraising efforts.
   GP-Led Secondaries	The GP initiates the secondary transaction, often through a continuation fund, for one or more assets in an existing investment vehicle—a role fulfilled by seasoned fund managers.
   	Motivations
   LP-Led Secondaries	Portfolio rebalancing, liquidity needs, regulatory changes, or a desire to exit underperforming funds, all of which
   GP-Led Secondaries	Extended hold periods for top-performing portfolio companies, fresh capital infusions, and optional liquidity for existing LPs. This approach can sometimes create a j-curve effect as returns improve over time.
   	Process
   LP-Led Secondaries	Typically involves a secondary buyer conducting due diligence on the fund’s underlying portfolio assets, negotiating the purchase price, and completing documentation to transfer the ownership interest
   GP-Led Secondaries	Process: Valuations must be transparent and fair, often requiring a fairness opinion or third-party advisory committees to mitigate perceived or actual conflicts, with NAV metrics serving as an important reference.

   	LP-Led Secondaries	GP-Led Secondaries
   Definition	LPs sell their fund stakes to third parties, often as part of broader fundraising efforts.	The GP initiates the secondary transaction, often through a continuation fund, for one or more assets in an existing investment vehicle—a role fulfilled by seasoned fund managers.
   Motivations	Portfolio rebalancing, liquidity needs, regulatory changes, or a desire to exit underperforming funds, all of which	Extended hold periods for top-performing portfolio companies, fresh capital infusions, and optional liquidity for existing LPs. This approach can sometimes create a j-curve effect as returns improve over time.
   Process	Typically involves a secondary buyer conducting due diligence on the fund’s underlying portfolio assets, negotiating the purchase price, and completing documentation to transfer the ownership interest	Process: Valuations must be transparent and fair, often requiring a fairness opinion or third-party advisory committees to mitigate perceived or actual conflicts, with NAV metrics serving as an important reference.

Spotlight on Continuation Funds

What Are Continuation Funds?

A continuation fund is a new vehicle created to acquire an existing portfolio—or a single “trophy asset”—from an older fund nearing the end of its lifecycle.

Instead of an enforced exit, the GP reforms this fund to hold high-performing investments longer, similar to a buyout approach.

Existing LPs can choose to roll their interests into the continuation vehicle, cash out, or opt for a blend of both, which can enhance private equity investments returns. New LPs can also join.

And their popularity continues to grow from strength to strength: Continuation funds accounted for 90% of GP-led transactions in the first half 2024, up from 88% in 2023.

Learn more about the ongoing revolution in continuation funds.

What’s Driving the Increased Interest in Continuation Funds?

The soaring interest in continuation funds is primarily fueled by:

• Strong Asset Performance: If a GP sees significant upside in an asset beyond the standard 7–10-year fund life.
• LP Liquidity Preferences: Some LPs might want partial liquidity, while others want to remain invested.
• Market Demand for Quality Deals: Secondary investors often prefer high-quality or stable assets, which may include illiquid assets, making continuation funds an attractive target for buyout strategies.

In 2024, these continuation fund transactions represented 90% of GP-led deals—a trend expected to continue in 2025.

For example, Trustar Capital set up a $1bn continuation fund for its McDonald’s operations in China and Hong Kong, providing an extended runway for growth while allowing partial exits for existing investors.

Continuation Funds Benefits and Risks

Benefits

• Extended Value Creation: GPs and investors capture more upside in high-growth portfolio companies, often boosting the fund’s NAV.
• Liquidity Options: Investors seeking exits can realize gains, while those with longer horizons maintain exposure to quality investments through improved asset management practices.
• Aligned Interests: When structured properly, these deals can align GP and LP incentives through transparent governance, ensuring smooth allocation of returns.
  
  Risks
  • Valuation Disputes: Setting a fair price for the assets can be contentious.
  • Conflict of Interest: GPs orchestrating self-dealing transactions must ensure strong third-party valuations and clear disclosures for informational purposes.
  • Regulatory Scrutiny: As the market grows, regulators are paying closer attention to potential conflicts.
    

The Boom Continues? 2025 Outlook

The secondaries market is expected to surpass $145–$150bn in full-year transaction volume, per forecasts from Houlihan Lokey and PJT Partners. But what key factors are driving the momentum in this space?

1. Record-Breaking Funds
   • Ardian’s $30bn secondaries fund highlights the surging appetite among institutional investors for large-scale secondary investments, especially in the aftermath of the US presidential election in November 2024. “[President Trump’s] going to be definitely more of a proponent than . . . an adversary when it comes to democratisation of private markets,” said Mark Benedetti, Ardian’s executive president. 
   • Other major players raising multi-billion-dollar secondaries vehicles in recent months include: Coller Capital ($12.5bn), Intermediate Capital Group ($11bn), Clipway ($4.0bn), Lexington Partners ($22.7bn), Hollyport Capital ($3bn), and Pomona Capital ($3.0bn), with many more on track to emulate the popularity and success of the secondaries market. 
2. Economic Uncertainty
   • Macroeconomic headwinds prompt LPs to seek liquidity. In uncertain times, the ability to exit positions early or rebalance portfolios can be invaluable—especially in a volatile capital markets environment.
3. Narrowing Bid-Ask Spreads
   • With more buyers and better data analytics, the gap between what sellers want and what buyers are willing to pay has narrowed, facilitating smoother deal flow.
4. Extended Holding Periods
   • GPs want to hold onto “winners” beyond the typical fund life, often transferring assets to continuation vehicles. This is a hallmark of the current secondary wave, and reflects a long-term investment strategy shaped by past financial crisis learnings and refined risk mitigation tactics.
5. LP Appetite for Partial Exits
   • Some LPs seek partial liquidity to meet distribution targets, while still retaining exposure to top-performing assets.

The Role of Compliance, KYC, and AML

With the proliferation of secondary transactions, both the number of stakeholders and the complexity of each deal rises.

With multiple jurisdictions, beneficial owners, and cross-border capital flows, regulatory scrutiny is increasing in intensity. 

Entities like the Securities and Exchange Commission (SEC) in the United States and analogous bodies across Europe (The European Securities and Markets Authority (ESMA), Germany’s BaFin, France’s AMF, and the Netherlands’ AFM, among others) have signaled closer oversight of private equity.

This includes secondaries, which can involve multiple layers of ownership.

Key Compliance Pain Points

1. Verifying Beneficial Owners
   • Secondary deals can include numerous participants—some of whom may be passive LPs with partial interests. GPs and fund administrators must ensure Know Your Customer (KYC) processes are fit for purpose.
2. Anti-Money Laundering (AML) Requirements
   • The cross-border nature of secondaries demands thorough checks for suspicious transactions, sanctioned entities, and money laundering red flags.
3. Global Regulatory Patchwork
   • Different jurisdictions have varying KYC/AML standards. A uniform approach is difficult to conceive of right now, but will ultimately prove essential.

How Vestlane’s Solutions Address These Challenges

Tools like Vestlane’s KYC/AML suite and investor onboarding platform streamline the entire compliance process:

• Automated Identity Checks: The platform quickly verifies identity documents and cross-references global watchlists.
• Real-Time Risk Monitoring: Ongoing scans ensure no new red flags appear mid-transaction.
• Secure Documentation: All documentation—capital commitments, subscription documents, side letters—resides in a centralized, audit-ready portal.
• Scalable Workflows: Whether you’re onboarding a handful of LPs or hundreds across multiple jurisdictions, the system simplifies data collection and compliance reviews.

In a market where speed can be a competitive edge, having a centralized tech solution for compliance can reduce friction and accelerate secondary deals, while minimizing regulatory headaches.

Best Practices and ILPA Guidelines

Transparency and Fair Valuation

The Institutional Limited Partners Association (ILPA) has published guidelines focusing on the fair treatment of LPs during continuation fund setups and secondary transactions. Some highlights:

• Fairness Opinions: Engage independent parties to validate the valuation used for transferring assets to a continuation vehicle.
• Disclosure: Provide LPs with adequate notice and in-depth data to make informed decisions (e.g., whether to roll over or take liquidity).

Advisory Committees & Conflicts of Interest

• LP Advisory Committees should be consulted early, especially when potential conflicts of interest arise in GP-led deals.
• Some GPs also opt for third-party fairness opinions to ensure arms-length valuation.

Early LP Engagement

A key recommendation is giving LPs ample time and clarity on the process:

• Detailed asset performance data.
• Proposed terms for the new vehicle.
• The timeline for deciding on a rollover versus a cash-out.

Secondaries Are Now a Main Event

At this stage, the secondary market has cemented itself as a core component of the private equity ecosystem, with 2025 shaping up to be another record-breaking year. 

The renewed interest in continuation funds, once considered a “niche” tool, has opened doors for GPs to extend their best assets while providing LPs with structured liquidity options. 

At the same time, LP-led secondaries remain strong, offering flexible ways to manage portfolio rebalancing in the face of macroeconomic uncertainty.

Yet, as the market matures, so does regulatory scrutiny.

Compliance, KYC, and AML are no longer afterthoughts; they are central to executing secondary transactions efficiently and ethically.

This is where platforms like Vestlane come in.

With automated workflows, real-time risk monitoring, and secure document management, Vestlane ensures that GPs, LPs, and secondary buyers can focus on the deal, not the paperwork.

1. Continuation Funds on the Rise: They now represent the lion’s share of GP-led secondaries.
2. Ardian’s $30bn Milestone: Underscores the massive scale of secondaries in 2025.
3. Compliance Is Critical: Complex transactions demand robust AML/KYC processes and transparent valuations.
4. Tech Solutions Lead the Way: Platforms like Vestlane reduce friction, mitigate risk, and enable faster closings.

Futureproof Investment Management

To learn more about how Vestlane’s KYC/AML and investor onboarding solutions can streamline your secondary transactions, book a demo or contact us below.

Stay ahead in an evolving market by equipping your firm with the tools it needs to close deals faster, maintain strict compliance, and retain the confidence of both new and existing investors.