Private equity secondaries are breaking records, yet liquidity remains far from universal. New research highlights a fundamental distinction between market growth and market access – and raises questions about how private market liquidity should be measured.

A USD 260 Billion Market. Still Difficult to Exit?

Private equity has a liquidity problem. That is hardly news. What is more interesting is that the problem persists even as the market designed to address it reaches unprecedented scale.

According to Lazard’s Interim 2026 Secondary Market Report, global secondary transaction volume reached USD 124 billion in the first half of 2026, up approximately 28% year-on-year. Over the preceding twelve months, transactions totalled an estimated USD 260 billion.

By almost any conventional measure, the secondary market is thriving. Institutional investors are increasingly using secondaries to manage portfolio exposures, while private equity managers employ continuation vehicles to provide liquidity without necessarily selling the underlying assets.

Yet there is an important distinction between a market that trades substantial volumes and one in which investors can readily find buyers. A record-breaking secondary market does not automatically mean that private investments have become easier to sell. For a large institutional investor disposing of a diversified fund portfolio, the secondary market offers an established ecosystem of buyers, advisers and transaction structures. For a family office holding a smaller position, or an early investor seeking to sell shares in a private company, the situation may look rather different.

The assets themselves may be attractive. Finding a buyer willing and able to acquire them is another matter.

Where the Secondary Market Still Falls Short

The concentration of secondary market activity offers some perspective. Jefferies’ 2025 Global Secondary Market Review reports that transactions below USD 250 million represented 41% of total deal count but just 13% of transaction volume. The ten largest secondary buyers accounted for approximately half of total market volume.

These figures also reveal encouraging developments. Smaller specialist buyers are becoming more active, and the market is gradually broadening beyond its largest participants.

Nevertheless, transaction economics continue to favour scale. A secondary transaction involves identifying potential buyers, assessing available information, agreeing on a valuation, negotiating contractual terms and, frequently, obtaining transfer approvals. These processes require time and resources, regardless of whether the underlying position is worth USD 5 million or USD 200 million.

For smaller transactions, the relative cost of execution can become a significant obstacle. This creates an important distinction: An investment may have economic value without having an economically viable route to liquidity.

The problem is not necessarily a shortage of capital interested in private assets. It may be the difficulty of connecting that capital with specific investment opportunities under workable transaction conditions. Illiquidity is therefore not exclusively a characteristic of the asset. It can also be a consequence of how the market operates.

What the Research Reveals About the Cost of Liquidity

Academic research provides useful evidence of these market frictions. In their 2019 study, The Liquidity Cost of Private Equity Investments: Evidence from Secondary Market Transactions, Taylor Nadauld, Berk Sensoy, Keith Vorkink and Michael Weisbach analysed transactions involving private equity fund interests. They found that buyers earned approximately five percentage points higher annual market-adjusted returns than sellers across their sample. For more typical mid-life fund transactions, the difference was smaller, at approximately three percentage points.

These findings illustrate the economic value of supplying liquidity. Investors willing to acquire positions from sellers seeking an exit can earn additional returns, partly reflecting information asymmetries and limited market depth.

More recently, a study published on 5 October 2026 by Greg Brown and William Volckmann of the Institute for Private Capital examined almost 3,000 pricing observations involving buyout fund interests between 2015 and 2025. Their paper, Private Equity Secondary Pricing: Understanding the Current Market, found that transaction prices averaged approximately 8% below net asset value, with discounts closely related to broader financial market conditions. Despite record transaction activity, the researchers found no indication that aggregate secondary pricing through 2025 was inconsistent with a properly functioning market.

But perhaps the most interesting finding concerns something other than pricing. The factors determining whether an investment trades are not necessarily the same as those determining the price it achieves.

That distinction is fundamental. An asset might command a reasonable valuation if a suitable buyer could be found. Yet without access to that buyer, its theoretical market value provides little practical liquidity. Conversely, a lack of transactions does not automatically imply that the asset is unattractive or incorrectly valued.

The research concerns private equity fund interests rather than individual venture capital shareholdings. Its conclusions should not simply be transferred to every segment of the private markets. Nevertheless, it reinforces an important principle: Transaction prices alone cannot capture the full extent of market accessibility.

The Next Opportunity Is Not Just More Capital

There is little reason to believe that private equity or venture capital will ever offer the same liquidity characteristics as publicly traded securities. Nor should that necessarily be the objective. Private investments involve different information requirements, ownership structures and investment horizons. Transfer restrictions, approval rights and complex valuations serve legitimate purposes, even when they complicate transactions.

But not every obstacle is inherent to private ownership. Fragmented buyer networks, limited visibility of available investment opportunities and disproportionately high transaction costs are questions of market organisation and market organisation can evolve. More efficient ways of identifying counterparties, exchanging reliable information and managing transaction processes could make certain secondary transactions commercially viable where traditional approaches struggle to justify the effort.

That does not eliminate investment risk or guarantee liquidity. It can, however, improve the conditions under which willing buyers and sellers find one another.

For private markets, this matters beyond individual exits. Companies and funds often require long investment horizons to create value. Investors, meanwhile, may face changing liquidity needs, portfolio allocations or strategic priorities. An investment does not necessarily become less attractive simply because its original investor needs to sell.

A more accessible secondary market could help separate the investment horizon of the underlying asset from the holding period of an individual investor.

From Transaction Volume to Genuine Market Access

The remarkable growth of private equity secondaries is evidence of an increasingly mature market. Yet maturity should not be measured exclusively in billions traded.

The more revealing questions concern participation: Which investors can realistically sell? Which positions attract buyers? And at what transaction cost does a potential sale cease to make economic sense?

The answers are likely to vary considerably across fund interests, direct company shareholdings and transaction sizes. Improving market access will not make every private investment liquid. Some assets will remain difficult to sell for perfectly rational economic reasons. But where illiquidity results primarily from fragmented information, limited counterparty access or inefficient transaction processes, there may be room for meaningful progress.

The secondary market has demonstrated that it can attract capital. Its next test is whether it can connect that capital with a broader range of investment opportunities.

After all, the real measure of a functioning market is not simply how much changes hands – but how effectively willing buyers and sellers can transact.

References

Academic Research

• Nadauld, T. D., Sensoy, B. A., Vorkink, K., & Weisbach, M. S. (2019). The Liquidity Cost of Private Equity Investments: Evidence from Secondary Market Transactions. Journal of Financial Economics, 132(3), 158–181. Read publication.
• Brown, G., & Volckmann, W. (2026). Private Equity Secondary Pricing: Understanding the Current Market. Institute for Private Capital, 5 October 2026. Read research.

Market Research

• Lazard (2026). Interim 2026 Secondary Market Report. 13 August 2026. Read report.
• Jefferies Private Capital Advisory (2026). 2025 Global Secondary Market Review. Read report.