Inside GP-Led Transactions: The Secondary Market's Fastest-Growing Segment
- 1 day ago
- 2 min read
The GP-led segment of the secondary market has become one of private markets' fastest-growing strategies, now representing close to half of all secondary deal volume. Since 2019, it has grown at a 26% compound annual growth rate — and 2025 GP-led volume alone surpassed the entire secondary market's total volume from just three years prior.
From Niche to Mainstream
GP-led transactions were initially used before 2016 mainly as a rescue tool for underperforming managers. Over time, they evolved into a legitimate portfolio management strategy. Post-COVID, large-cap sponsors began using single-asset continuation vehicles (CVs) as an alternative to traditional M&A exits, and mid-market GPs have since followed suit.
An All-Weather Strategy
Some sceptics argue CV growth is simply a product of a weak M&A market, but the data tells a different story. GP-led volumes grew even faster during the strong M&A environment of 2019–2021 than in the sluggish years that followed. CVs offer GPs genuine structural benefits — economic upside through reinvested carry, stronger LP relationships, and flexible liquidity solutions — making them attractive regardless of the broader exit environment.
A Supply/Demand Imbalance
The market is significantly undercapitalised. The capital overhang ratio (unfunded secondary capital divided by annual transaction volume) sits near a historic low of approximately 1.0x, meaning buyers barely have enough capital to cover one year's deal flow. The annual deal flow is roughly double what actually closes, pointing to substantial pent-up supply.
Why the Market is Attractive to Buyers
High quality assets: CVs reviewed between late 2022 and mid-2025 showed average realised multiples of 3.9x–4.5x cost for selling funds.
Strong alignment: GPs committed an average of 9% to CVs — well above typical primary fund commitments — and rolled 100% or more of carry proceeds in 88% of deals.
Lower risk profile: Single-asset CVs have shown lower loss ratios and stronger early appreciation versus traditional buyouts.
The Middle-Market Advantage
As the competitive landscape evolves, firms with deep middle-market GP relationships hold a structural edge. Smaller CVs (funds under $500M) have already outperformed larger ones — returning a median net multiple of 1.6x versus 1.4x. Middle-market GPs also tend to carry more conservative valuations, creating greater potential for valuation arbitrage at entry, since most CVs are priced close to NAV.
The Bottom Line
Success in GP-led secondaries increasingly comes down to relationship capital. Platforms combining genuine secondary execution expertise with trusted, long-standing GP relationships — particularly in the small and mid-market — are best positioned to access differentiated, non-syndicated deals and capture the full opportunity in this growing but still undercapitalised market.
Please click here for the original white paper published by Hamilton Lane.
