PE Secondaries: How Accredited Investors Buy Private Equity at a Discount

What Is the PE Secondary Market?

When a limited partner invested in a private equity fund back in 2018, they signed up for a ten-year lockup. By 2025, that LP might need liquidity. Their fund commitment is not freely tradable on any exchange. So they sell it privately, to a buyer who steps into their shoes and takes over both the remaining capital commitment and the right to future distributions. That transaction is a secondary market sale. According to Eaton Partners' 2025 Secondary Market Review, this market has grown from a niche liquidity mechanism into a $229 billion annual market with institutional infrastructure, dedicated buyers, and predictable pricing benchmarks.

You are not buying into a new fund that will spend five years deploying capital. You are buying an interest in a fund that already owns companies. The portfolio is partially mature. Some distributions may have already occurred. You are acquiring the seller's remaining economic interest at whatever price the two parties agree on. That price is almost always expressed as a percentage of net asset value, or NAV.

The secondary market exists because primary PE funds offer no exit before the fund winds down. Secondaries create that exit. Specialized buyers including Lexington Partners, Coller Capital, Ardian, and HarbourVest have built entire businesses around providing that liquidity at scale. They raise dedicated secondary funds, hire teams to underwrite portfolios, and deploy billions into these transactions every year.

LP-Led vs. GP-Led: Two Completely Different Animals

When people say "secondaries," they often lump together two transactions that work very differently. You need to understand both.

LP-led secondaries are what most people picture. A pension fund, endowment, or family office wants to exit their position in a PE fund before it terminates. They find a secondary buyer, agree on a price, and transfer the LP interest. In 2025, LP-led volume hit $124 billion, according to Eaton PCA. Pricing for buyout fund LP interests settled at 88 to 90 cents on the dollar in H1 2025. A decade ago, discounts of 20% or more were common. Tighter pricing today reflects more competition among buyers and stronger underlying portfolio performance.

GP-led secondaries, also called continuation vehicles or CVs, work differently. Here, the general partner itself initiates the transaction. Instead of liquidating a fund at the end of its life, the GP moves one or more portfolio companies into a new vehicle. Existing LPs get the choice: take a cash exit, or roll into the new vehicle and stay invested. New capital comes in from secondary buyers who want exposure to those specific companies. GP-led volume reached $105 billion in 2025, a near-even split with LP-led deals.

The pricing gap between the two structures is significant. Single-asset continuation vehicles, where a GP is rolling its single best company into a new vehicle, often price at 99.5% of NAV. The GP believes strongly in that asset and will not sell it cheap. LP-led portfolios, especially diversified multi-fund baskets, trade at larger discounts because the buyer is taking on a bundle of assets they need to underwrite individually.

Venture secondaries occupy a different part of the spectrum. After a painful repricing cycle, venture LP interests rebounded from 65% of NAV in 2023 to around 77% of NAV in 2025. Still a meaningful discount, but the worst of the markdown period appears to have passed.

For a deeper comparison of these structures, the AIN alternative investments hub has background on how continuation vehicles compare to primary fund commitments from an LP perspective.

How NAV Discounts Are Actually Calculated

The discount you see quoted is not a random negotiation. It is a function of several measurable inputs. Commonfund's analysis of LP-led secondary pricing identifies the key drivers as fund vintage, asset class, geographic concentration, remaining portfolio duration, and the GP's track record on distributions.

A 2019 buyout fund with two years left on its term, run by a GP with a strong exit record, will price much closer to NAV than a 2017 fund still holding four companies with unclear exit timelines. The buyer is essentially paying for the quality and predictability of future cash flows. The riskier those cash flows look, the deeper the discount required to compensate.

Buyers also underwrite the underlying portfolio companies directly. They review audited financials, recent valuations, portfolio company debt levels, and macro conditions affecting the sector. Secondary buyers like Ardian and Coller Capital employ analysts who do this work across hundreds of transactions per year. When you access the market through a fund-of-funds or feeder vehicle, that underwriting is being done on your behalf.

One thing to watch: NAV can lag reality. PE fund valuations are marked quarterly, not daily. If public markets have moved significantly since the last quarter-end mark, stated NAV may not reflect current conditions. Sophisticated secondary buyers apply their own haircuts or premiums before bidding. That adjustment is part of the art of secondary pricing.

The DPI Crisis: Why So Many LPs Are Selling Right Now

The surge to $229 billion in 2025 was driven by a specific, quantifiable problem on the LP side: a collapse in distributions.

Distributions-to-paid-in capital, or DPI, measures how much cash LPs have received relative to what they invested. According to data cited in Bain's Global PE Report, LPs' DPI hit an 11-year low of just 11% in 2024. That means for every dollar invested, LPs got back 11 cents. PE-backed companies were not being sold. High interest rates made IPOs scarce. Strategic buyers were cautious. GPs held companies longer, and distributions dried up.

For LPs with liquidity needs, allocation targets, or boards demanding returns, waiting for GPs to figure it out was not an option. They turned to the secondary market. That wave of selling pressure created the supply that secondary buyers absorbed at scale in 2025. It also explains why secondary dry powder, at $299 to $327 billion by end-2025, burned down to a 1.3x coverage ratio compared to 2.7x for buyout PE. The capital was being deployed fast enough to actually move the coverage ratio.

The distribution cycle is expected to normalize as interest rates moderate and exit activity picks back up. But the structural dynamic, where LPs need exit options that GPs cannot always provide on schedule, is permanent. The secondary market is now a core piece of the PE liquidity architecture, not a distress signal.

How Accredited Investors Access This Market

You cannot walk up to Lexington Partners or Coller Capital and ask to co-invest on their next secondary deal. Their funds are institutional, with minimum commitments in the tens of millions. But accredited investors have real access points today.

Secondary-focused fund-of-funds. Managers like Adams Street Partners run dedicated secondary strategies that aggregate capital from smaller investors and deploy it across many secondary transactions. You get diversification across dozens of underlying PE funds rather than concentration in a single deal.

Feeder vehicles through registered investment advisors. Many RIAs now offer access to secondary strategies through feeder funds structured as limited partnerships or interval funds. Minimums vary but have come down significantly in recent years.

Multi-family office programs. Family office platforms sometimes bundle accredited investors into secondary transactions that would otherwise require institutional minimums. This is the structure INVL Family Office is using for its new offering, described below.

Secondary platforms and marketplaces. Several fintech platforms now offer individual accredited investors the ability to buy LP interests directly, typically in smaller lot sizes. These platforms handle the transfer documentation and due diligence infrastructure. Pricing on smaller lots may not match what institutional buyers pay on nine-figure transactions.

Before committing, understand the fee structure. Secondary funds often carry management fees of 1 to 1.5% and carried interest of 10 to 15%. Your net return depends on both the discount you buy at and the fees you pay on the way out. The AIN LP investing guide for accredited investors covers fee structures in detail.

INVL Family Office and Adams Street Partners: A Current Access Example

In June 2026, INVL Family Office announced the launch of its Global PE Secondaries Access Fund, structured in partnership with Adams Street Partners. The minimum investment is $145,000, and the vehicle is structured as a closed-end fund. This is a concrete example of how the access model described above works in practice.

Adams Street Partners manages over $65 billion in assets and has executed more than 310 secondary deals since 1986. The firm operates from 13 global offices. In 2025, it was named Secondary Investor of the Year by Real Deals. The INVL vehicle is giving accredited investors a pathway into Adams Street's secondary deal flow at a minimum that, while not small, is accessible to a meaningful segment of high-net-worth individuals.

I am not recommending this specific fund. What I am pointing to is the structural shift it represents. Institutional-quality secondary managers are now designing products for the accredited investor segment. That did not happen a decade ago. You can read more about the structures PE managers use for accredited investor access in AIN's fund structure overview.

The Risks You Cannot Ignore

This market has real advantages. Shorter J-curve of two to five years instead of seven to ten. Immediate exposure to a seasoned portfolio. A built-in discount at purchase. Access to top-quartile funds that are otherwise closed to new investors. These are structural benefits, not marketing language.

But the risks are equally real.

Illiquidity persists. You are buying an illiquid asset through an illiquid vehicle. Secondary funds typically have holding periods of five to seven years. If your circumstances change, you cannot sell easily. There is a secondary market for secondary fund interests, but the bid-ask spreads are wide and the process is slow.

NAV lag can mislead you. If you buy at 90% of NAV and NAV has been marked up aggressively during a period of cheap money, you may not be buying at the discount it appears. Scrutinize the vintage year and the GP's valuation methodology before assuming stated NAV is accurate.

Fee drag is real. Secondary funds charge fees on top of the underlying PE fund's fees. In a fund-of-funds structure, you may be paying three layers of fees. High gross returns can still produce mediocre net returns.

Concentration in a specific vintage year. Secondary portfolios you buy today were originally funded in the 2017 to 2022 period. If those vintages were concentrated in sectors that underperform over the next cycle, that matters.

GP-led deal conflicts of interest. When a GP moves assets into a continuation vehicle, they have a conflict. They want to retain their best companies. Existing LPs are offered a choice but may feel pressure to roll rather than exit. The independent fairness opinion process is not always rigorous. The SEC has issued guidance on GP-led conflicts and expects managers to address them explicitly.

Market timing is hard to call. The secondary market is not countercyclical. When public markets collapse and LP portfolios are under pressure, secondary prices drop sharply. The 2020 dislocation saw discounts widen to 25% or more on some buyout portfolios. If you buy heading into a recession, the discount at entry may not be enough to protect you from further markdown.

Your Next Step

If you are an accredited investor looking at the secondary market seriously, start by getting clear on your liquidity needs and time horizon. This is not a two-year trade. Plan for five to seven years minimum. Then look at the fee-adjusted return expectations from secondary managers. Published data from Preqin's PE secondaries research, Bain's annual Global Private Equity Report, and Lazard's Secondary Market Report give you benchmark net IRRs across vintage years and strategies. Compare those benchmarks to what your RIA or platform is quoting.

Ask your advisor or wealth manager whether they have access to secondary vehicles structured for accredited investors. In 2026, most serious RIAs do. If they do not, it may be worth asking why. Demand for this exposure has grown fast enough that access is no longer the primary barrier. The primary question now is whether the specific vehicle you are considering has the right manager, the right pricing discipline, and a fee structure that leaves enough net return to justify the illiquidity. Answer those three questions, and you will be in a much better position to decide whether PE secondaries belong in your portfolio. For a broader look at how secondaries fit within a diversified alternatives allocation, the AIN portfolio construction guide for accredited investors is a useful starting point.

Jeff Barnes, MBA, writes on private equity, venture capital, and alternative investments for Angel Investors Network. This article is for informational purposes only and does not constitute investment advice. All investments involve risk, including the possible loss of principal.

Author Disclosure: Jeff Barnes, MBA has no personal position in any company, fund, or platform named in this article. Angel Investors Network has no current commercial relationship with any party mentioned. AIN provides marketing and education services, not investment advice. Past performance does not guarantee future results. All investments involve risk, including loss of principal.