Though a small portion of the market's NAV, retail investor participation is growing at 50% annually. This new, consistent capital flow is a significant structural change, increasing overall market liquidity and enabling more transactions.
Sophisticated investors no longer use secondaries just to quickly build a private equity program. The strategy has matured into a core allocation, valued for offering faster deployment, better cash flow control, and consistent performance across market cycles.
Media reports of "manic activity" in secondaries are misleading. The market isn't irrational; it's simply experiencing massive growth. Annual volume has surged from ~$40 billion to over $200 billion in a decade, making experienced buyers exceptionally busy.
The secondary market faces a potential capital shortage. The total available dry powder (~$200B) nearly equals the transaction volume expected this year alone. This tight supply-demand balance suggests a favorable risk-reward for new capital entering the space.
General Partners (GPs) have shifted from viewing secondary sales as an LP-driven nuisance to a strategic tool. They now facilitate liquidity for investors to maintain their reputation and use continuation vehicles to retain top-performing assets beyond a fund's original lifespan.