Secondaries come of age as liquidity strategy moves to the core

Consecutive record years for secondaries volumes signal a fundamental shift in how liquidity is managed across private markets. With traditional exit routes constrained in recent years, sponsors and investors have had to look elsewhere to create optionality. Secondaries have filled that gap.

This trend reflects the reality of long-duration capital meeting investor liquidity needs in a world where distributions have been slower, and portfolio rebalancing has become more frequent, rather than a reaction to a slow exit environment.

Even if exit conditions improve, it’s unlikely that the market will revert to materially lower volumes. The infrastructure, expertise and investor appetite now in place support a more permanent role for secondaries within portfolio construction.

Secondaries have earned their place as a core portfolio management tool.

While volumes have reached new highs, demand continues to outstrip supply in key segments of the market. 

According to KPMG, average LP deal size grew to $450 million in 2025, up from $425 million in 2024, reflecting strong buyer capitalisation. At the same time, GP-led volume reached $115 billion in 2025, fuelled by continued use of continuation vehicles, even as the IPO market showed signs of recovery. These figures underscore both the depth of capital available and the growing sophistication of transaction structures.

Competition for high-quality secondary assets is intensifying as timelines compress. As a result, managers are being pushed to move faster in increasingly crowded processes.

In practice, this means processes are faster, more competitive and less forgiving of slow or incomplete execution. Shorter timelines increase execution risk, particularly where data and governance are not deal-ready. 

Disciplined underwriting and clear investment conviction are becoming critical differentiators. Speed matters, but only when it is paired with rigour and clarity of thesis.

Rising deal volumes bring more than opportunity. They also create operational strain. 

Complex structures, bespoke terms and cross-border elements increase pressure on fund operations and data teams. What may once have been manageable through manual processes or informal reporting can quickly become a bottleneck when multiple transactions are running in parallel.

In this environment, operational friction becomes a commercial risk. Weak data, inconsistent valuation frameworks or unclear governance can delay deals, complicate negotiations or undermine confidence late in the process. Under tight timelines, even relatively small issues can have outsized consequences.

For managers active in secondaries, operational readiness must be part of the transaction's overall risk framework, rather than confined to the back office. 

Reporting, valuation policies and investor communications need to be aligned, consistent and accessible. Without that foundation, execution risk increases.

As secondaries move into the core of private markets activity, LP behaviour is shifting in ways that reinforce the market's structural nature.

Historically, many institutional LPs were seen as patient, long-duration investors in private equity. The prevailing philosophy was to commit capital and allow managers to execute over the fund’s full life. Secondary sales were rarely part of the toolkit.

That approach is evolving. For example, recent reports show that major Ivy League endowments are reassessing private equity exposure amid softer returns and liquidity constraints. 

Princeton lowered its projected endowment return, citing declining private market performance. Yale trimmed its leveraged buyout portfolio for the first time in a decade. Harvard has explicitly described the secondary market as a strategic tool, using it to sell private equity stakes when pricing is attractive and to refine portfolio composition.

This marks a notable shift. Institutions that once avoided secondary sales are now actively managing liquidity and portfolio construction through the secondary market. Rather than waiting passively for distributions, LPs are taking a more dynamic approach to capital allocation. 

This change in behaviour has implications for managers. As LPs move from long-term holders to active liquidity managers, scrutiny naturally increases. Investors are, of course, focused on performance outcomes, but they are now also looking at how transactions are executed, valued, and governed. Transparency, consistency and auditability matter more when secondaries are used deliberately as part of portfolio management rather than opportunistically.

Secondaries are now assessed with the same institutional lens as primary commitments and co-investments.

While demand will remain strong, operational pressures and LP scrutiny will persist. Managers that combine disciplined execution with robust governance and clear reporting will be better positioned to meet the expectations of increasingly sophisticated and proactive investors.

Faster markets demand fast, reliable and structured data. Managers that can quickly access and analyse accurate portfolio information will be better equipped to price opportunities with confidence and respond to competitive timelines without compromising standards.

Poor data slows diligence, complicates valuations and increases execution risk under time pressure. In crowded auctions, delays or inconsistencies can weaken a bid or erode negotiating leverage. Clear data frameworks and well-defined governance structures support both internal decision-making and external transparency.

To compete effectively, managers need fast, structured, and reliable data to accurately price opportunities and support confident, informed decision-making. 

As volumes rise, data quality increasingly separates scalable platforms from those that are stretched. Investment in systems, controls and reporting infrastructure is becoming central to sustained participation in the market.

Activity alone is no longer enough. Preparedness is what enables managers to compete effectively in a market defined by speed and scrutiny. Those investing in operational resilience, governance and data infrastructure will execute with greater consistency and confidence.

Managers relying on manual workarounds or fragmented systems may find timelines tighter, questions sharper and margins thinner. In a market that has demonstrated structural growth, the ability to scale without compromising standards will be a defining advantage.

The secondaries market has established itself as a core component of private markets liquidity. The question for managers is no longer whether to participate, but how to do so in a way that aligns speed with discipline and opportunity with operational strength.

As secondaries activity continues to scale, operational resilience becomes a competitive advantage rather than a support function. Managers need confidence that their structures, reporting and governance frameworks can withstand compressed timelines and heightened LP scrutiny.

At Vistra Fund Solutions, we support private markets managers across the full lifecycle of secondary transactions. From fund structuring and cross-border administration to investor reporting and data management, we help ensure operational frameworks are deal-ready and scalable.

Our teams work closely with managers to strengthen governance, enhance transparency and deliver structured, reliable data that supports pricing, diligence and execution. As volumes increase and transactions grow more complex, having robust operational foundations in place can help reduce friction, protect timelines and reinforce investor confidence.

In a market that rewards preparedness as much as activity, the right operational partner can make a meaningful difference.

Contact us today to learn how Vistra Fund Solutions can support your fund’s growth and operational needs.

Stay connected with us on LinkedIn for the latest insights and updates from Vistra Fund Solutions.

Andrew Dillon is Head of Funds, Commercial – Europe and Middle East at Vistra Fund Solutions, where he leads commercial strategy across the region’s fund solutions business.

He brings more than two decades of experience in asset servicing and fund administration, with a focus on building and managing complex, multi-jurisdictional client relationships. His background spans senior leadership roles across global financial institutions, where he has driven business growth, led high-performing teams and supported asset managers across private equity, hedge funds and broader alternatives.

Andrew combines deep industry knowledge with a strong commercial focus, working closely with clients to navigate operational complexity and deliver structured, scalable solutions across markets.