GP-Led Secondary
A GP-led secondary is a transaction initiated by the GP to provide liquidity and restructure ownership of one or more assets, often through a continuation vehicle.
Allocator relevance: High-conflict, high-governance event—allocators must evaluate process fairness, pricing integrity, and economics reset.
Expanded Definition
GP-led secondaries typically occur when the GP wants to extend ownership of an asset beyond the original fund’s term, concentrate exposure, or create liquidity for LPs. LPs may roll into a new vehicle or sell to a secondary buyer. Because the GP is effectively on both sides of the transaction, governance and disclosure quality are crucial.
Allocators evaluate whether the GP-led process is value-creating (more time to realize upside) or fee-creating (resetting fees/carry without sufficient justification).
Decision Authority & Governance
Governance includes LPAC involvement, independent valuations, conflict disclosures, and clear presentation of LP options. Decision authority: LPs choose roll/sell, but the GP controls process design—so protections must be explicit.
Common Misconceptions
- GP-led secondaries are inherently negative.
- LP choice guarantees fairness.
- Pricing is objective because it’s “market.”
Key Takeaways
- Evaluate process integrity as much as asset quality.
- Fees/carry resets must be justified.
- Independent valuation and LPAC oversight are key trust signals.