- Traditional PE exits like IPOs and strategic sales have slowed, pushing firms to sell minority GP stakes and use secondary structures for liquidity.
- GP-stake transactions and secondary-market activity are surging, with record or near-record volumes and continuation vehicles now roughly 20% of PE exits.
- Both GPs and LPs are driving this shift as they seek cash while trying to preserve long-term value, manage fees, and address governance concerns.
- Top-tier firms can still secure favorable terms, but mid-tier managers face valuation pressure, control dilution, and potential misalignment with increasingly selective buyers.
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The private equity industry is clearly under pressure as traditional exit paths—IPOs and strategic sales—have become less accessible in 2025. This has led firms to explore alternative strategies to raise capital and manage liquidity, chief among them selling minority GP stakes and using secondary/continuation vehicles. Projections point to a dramatic increase in both the number of sellers and the volume of GP-stake deals over the next 24 months. [1]
Secondary funds and continuation vehicles are taking on greater importance. Firms holding high-performing assets but unable or unwilling to sell them externally are opting to extend their holding periods via continuation funds, transferring ownership internally to new vehicles. These transactions have grown by roughly 20% of all PE exits, up from around 12-13% in 2024. [2]
Liquidity demand is rising not just among GPs but LPs (limited partners) as well. LPs are increasingly looking to make secondary purchases, helping other LPs or GPs exit positions. Fund managers must balance the need for cash with preserving long-term value and managing governance and fee concerns. [1][2]
Strategic implications for top-tier firms versus mid-tier managers are diverging. Top PE firms, with strong track records and brand, still command better valuations and can pick favorable terms; but the widening seller pool may result in less favorable terms for mid-tier firms. Meanwhile, buyers of GP stakes must scrutinize alignment issues, control rights, and long-term outlooks. [1][2]
Open questions include: Will buyer demand scale sufficiently to match seller appetite? How will GP-stake valuations evolve under increased supply? What impact will LP-side expectations around GP commitment, fees, and valuation transparency have? And how will regulators respond to conflicts or valuation concerns in continuation vehicle deals? These will be key to PE’s path forward in 2026 and beyond.
Supporting Notes
- A survey by law firm Dechert found 77% of fund managers plan minority stake sales in the next two years, up from 34% in the previous year. [1]
- GP-stake deal volume totaled $3.5 billion through October 2025, on pace to exceed the prior high of ~$3.6 billion set in 2015. [1]
- Secondary market volume in 2024 exceeded $150 billion, with continuation funds rising in prevalence; Ardian raised a $30 billion secondary fund—the largest ever at the time. [3][2]
- Continuation-vehicles, transactions where firms buy assets from older funds into new funds, made up about 20% of PE sales in 2025, up from 12-13%—these facilitate GP exit or liquidity without external sales. [2]
- LP pressure for liquidity and demand for improved GP commitment and transparency are cited by GPs as key drivers behind GP stake sales and stake-diluting transactions. [1]
- The gap between what sellers want and what buyers are willing to pay is narrowing in the secondary market, indicating valuation compression. [3]
Sources
- [1] www.wsj.com (The Wall Street Journal) — December 24, 2025
- [2] www.ft.com (Financial Times) — December 2025
- [3] www.investing.com (Investing.com / Reuters) — January 17, 2025