Perspectives

Private equity secondaries, the reliable bench player always ready to contribute a burst of energy and momentum in the middle of a close game, delivered a record-breaking performance in 2025. Now, many managers and investors are considering how to elevate the once niche player to starter status in their portfolios.

"The secondaries market is no longer just a liquidity tool—it's a strategic lever for portfolio optimization, capital formation, and long-term alignment," said Nate Walton, Head of Private Equity Secondaries at Ares Management.

The numbers certainly bear this out. Secondary transactions in 2025 surged 41% year-on-year to ~$226 billion.¹ It’s a compelling story of growth and maturation, driven by increased adoption and innovative transaction structures. For investors, this expansion could mark a paradigm shift in the strategic role of secondaries in their investment strategies, especially given signs of accelerated momentum into 2026, which will likely carry into the rest of the year, said Walton.

From Niche to Mainstream

Nowhere is the structural evolution of secondaries more evident than in the GP-led segment. The $106 billion in 2025 (51% growth from 2025)¹, transaction volume underscores investors’ growing acceptance of continuation vehicles (CVs) as standard market practice to avoid having to sell assets before they have fully realized their potential value.

Secondary Market Dry Powder and Transaction Volume Over Time

The sophistication of these transactions has evolved significantly. Pricing for single-asset CVs remains very asset-specific and is more frequently close to par while pricing for multi-asset CVs remained closely correlated with pricing observed in the LP-led market with buyout assets pricing at single-to-double-digit optical discounts to NAV.² Meanwhile, multi-asset continuation vehicles (MACVs), which can serve as both liquidity solutions for aging fund assets and preparation for new fundraising vehicles, have captured as much as 40% of GP-led volume.¹

GP‑led secondaries closed 2025 with a level of maturity and discipline that underscored their evolution from niche liquidity solutions into true portfolio management tools. With deeper buyer specialization, stronger alignment frameworks, and rising conviction around high‑quality assets, continuation vehicles have firmly established themselves as a repeatable strategy for both sponsors and investors.

“What we’re seeing now is the culmination of a decade of refinement,” said Sebastien Burdel, Partner at Ares Secondaries. “Continuation vehicles aren’t stop‑gap tools anymore—they’re purpose‑built structures that allow sponsors to double down on their highest‑performing companies while giving existing LPs clear, aligned liquidity choices.”

Strategic Portfolio Rebalancing

While growth in GP-led transactions turned heads, limited-partner (LP) led secondaries still dominate, accounting for $120 billion in volume, approximately 53% of total activity.¹ However, the nature of LP participation has evolved from the distressed-selling patterns of previous cycles.

Today's LP sellers are more strategic, using secondaries programmatically to rebalance their portfolios, manage overallocations, and unlock liquidity. "LPs are no longer reactive sellers. They're using secondaries proactively to reshape portfolios and manage risk," said Scott Humber, a Partner at Ares Management.

LP Portfolio Pricing (% of NAV)

Pricing dynamics have varied widely based on asset class and vintage. Buyout and credit assets traded at 92% and 91% of NAV respectively, reflecting strong institutional demand for mature, cash-flowing investments. Venture pricing rebounded to 78% of NAV, the sharpest increase across strategies, driven by a strong VC-backed exit environment, especially in AI.³ This trend, paired with increased demand from both venture specialists and multi-strategy investors, unlocked large scale secondary transaction activity. LP‑led activity in 2025 was shaped by a notable rise in large‑scale portfolio sales, including 27 transactions above $1 billion, even as the buyer landscape broadened. Despite strong demand for mega‑deals, smaller buyers and ’40‑Act vehicles remained active, with sub‑$250 million deals still representing a meaningful share of overall activity.³

Structured Solutions: Innovation in Liquidity

Demand for liquidity has also fueled the market for structured solutions, which made up approximately 4% of the broader secondary transaction volume 2025.³

Greater awareness and adoption among both GPs and LPs have driven this growth. Structured solutions can encompass a broad range of financial products designed to address their specific liquidity and capital formation needs.

"Structured secondaries are bridging the gap between liquidity and long-term value,” said Barry Miller, a Partner at Ares, adding: “They're enabling sponsors to return capital while preserving upside.” NAV loans, for example, provide sponsors with liquidity without having to sell their assets, while preferred-equity structures can create flexible capital solutions, with upside for participants. Special purpose vehicles allow for targeted exposure to specific assets or strategies, and rated feeder structures have emerged as particularly innovative solutions for accessing institutional and retail capital markets.

Both LPs and GPs use these structured products to manage bid-ask spreads more effectively and enhance fundraising capabilities. For GPs, structured solutions provide alternatives to traditional exits while preserving their long-term value- creation strategy. For their part, LPs get more liquidity options while avoiding selling prized portfolio positions.

2026 Outlook

Several key trends will likely shape how the secondaries market continues to develop:

The secondary market enters 2026 with strong momentum and clear structural drivers. Following a record year in 2025, where volumes surpassed $220 billion, the market is expected to climb toward $275 billion in 2026—approximately 20% year-over-year growth and consistent with long-term trends.

At the same time, evergreen vehicles are set to become a structural catalyst for LP activity, offering flexible solutions for liquidity management, portfolio construction, and operational efficiency. As these vehicles scale, they will deepen market participation and enable creative LP solutions, including inkind transfers and semiliquid structures as cash alternative mechanisms.

Greater availability of realized and interim CV performance data is expected to sharpen investor selectivity. With clearer benchmarks for alignment, asset quality, and value creation plans, buyers are increasingly distinguishing between highquality GPled opportunities and those lacking conviction.

Finally, structured GP solutions are poised to play a more prominent role in 2026. In a market where distributions remain muted, these structures offer sponsors capital access while preserving long-term economics and exposure. For both GPs and LPs, structured solutions will continue to provide an important bridge between immediate liquidity needs and long-term value creation.