Secondary Buyer
A secondary buyer is an investor that purchases existing interests in funds, portfolios, or single assets from current holders to provide liquidity.
Allocator relevance: Secondary buyers set liquidity options and pricing—allocators should understand who provides liquidity and under what governance protections.
Expanded Definition
Secondary buyers acquire LP interests (traditional secondaries), GP-led stakes (continuation vehicles), or single-asset positions. They evaluate NAV quality, cash flow expectations, sponsor behavior, and process integrity. For allocators, secondary buyers influence both exit timing and realized outcomes: liquidity is not free—it comes with discounts, diligence requirements, and legal complexity.
Secondary buyers also shape portfolio management decisions: when to sell, how to price, and how to manage concentration or liquidity constraints.
Decision Authority & Governance
Governance includes approvals for selling interests (IC/board policies), valuation standards, conflict handling, and disclosure requirements. Decision authority often depends on ticket size and portfolio concentration—large sales require higher-level approvals.
Common Misconceptions
- Secondary liquidity equals “full value.”
- Buyers only care about discount and don’t underwrite governance.
- Secondaries are only for distressed sellers.
Key Takeaways
- Secondary liquidity is a pricing + process trade-off.
- Governance affects fairness and outcomes.
- Buyers vary—track which ones specialize in what.