The GP-led secondaries market isn’t fading – it’s maturing. As continuation funds face tougher underwriting, stronger governance demands and more selective buyers, only deals with real alignment and substance are being chosen
Five years ago, GP-led secondaries were a quirky innovation. Today, they’re part of the private markets mainstream. What began as a clever way to unlock liquidity has matured into a core strategy. But as deal flow stabilises and pricing tightens, the question is shifting: have GP-leds lost momentum, or are they simply entering a more sophisticated phase?
Initially, the concept was simple. GPs could hold on to star assets beyond the fund’s term, while LPs had the option of liquidity – a choice rather than a forced exit. During the liquidity crunch of 2020–2022, continuation funds became indispensable, accounting for a significant share of global secondary volume by 2023.
Rapid growth, however, brought challenges. Not every asset warranted continuation. As fundraising slowed and exits dried up, some managers leaned on GP-leds as a lifeline rather than a value-driven solution. LPs noticed. The initial excitement has given way to sharper scrutiny, tougher pricing and more selective underwriting.
Continuation funds are now tools for managing concentrated risk, forging strategic partnerships and reshaping portfolios
Pravi Prakash
Today, continuation funds are treated as fresh investments. That means independent valuations, rigorous due diligence, and genuine alignment – not recycled carry or cosmetic rollovers. Leading GPs are stepping up, co-investing meaningfully and aligning economics with new investors. Others are struggling to justify deals that look more like self-preservation than strategy.
Buyers want substance, not stories. Quality deals – typically single-asset, sponsor-led and backed by top-quartile GPs – remain competitive and oversubscribed. Meanwhile, weaker, multi-asset vehicles are finding it hard to attract buyers. This isn’t decline – it’s maturity.
Hybrid structures such as preferred equity, NAV loans and strip sales are gaining traction. They offer partial liquidity while keeping sponsors invested – aligning interests across the board. Continuation funds are now tools for managing concentrated risk, forging strategic partnerships and reshaping portfolios. They’re no longer mere extensions but seen more as capital solutions.
When a GP sells an asset to itself, conflicts are inevitable. Emerging best practices – fairness opinions, capped carry, LPAC oversight and transparency on future value creation – will define the next chapter. As LPs grow more sophisticated, the demand for stronger governance will only increase.
So, have GP-leds peaked?Perhaps in volume, but not in relevance. They’ve evolved from opportunistic fixes into strategic instruments. Continuation funds that genuinely align interests and create incremental value, not just delay the inevitable.
The challenge now isn’t growth but credibility. GP-leds don’t need to prove their usefulness anymore. They need to prove their integrity.
This market hasn’t ended. It’s grown up.