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At record highs, does the secondary market have room for further growth?

April 24, 2026 | 6 min read

Over $225 billion of private market secondaries closed in 2025, an over 40% increase on the prior year’s volume and an all-time high. Here we examine key questions that we are hearing from investors about the opportunity in secondaries, the market’s current temperature, and the key drivers behind the asset class’s continued expansion.

What are the key forces driving the rapid growth of the secondaries market?

Liquidity conditions in private markets have been depressed for several years now, with exits and distributions back to investors below long-term trends every year since 2022. This has caused a build-up of NAV in investors’ portfolios and led many to sell positions in the secondaries market, whether that’s to manage their exposures, to free up capacity for new investments, or to generate cash for other purposes.

GPs are under pressure to pass distributions back to their LPs. Given the challenges in other exit routes, continuation funds have been an increasingly attractive option to generate liquidity while retaining exposure to their more resilient assets.

It seems these pressures are being driven by challenging exit market conditions, so what would happen to secondary volumes if exit markets were to re-open?

A relevant comparison would be 2021. While IPO and M&A volumes famously hit all-time highs, the secondary market more quietly also reached a record level of activity.

This reflects the fact that secondaries are now an accepted portfolio management tool for both LPs and GPs – we have seen many repeat sellers in the market across various points in the cycle. So, even in the context of a broader recovery in exit activity, we would expect secondary deal volumes to hold up.

How is secondary pricing being impacted by current market conditions? And how important is this to overall secondary performance?

At a headline level, secondary pricing has been relatively stable in recent years. However, this masks divergent pricing across strategies. For example, high-quality mid-market buyout funds — which have significantly more routes to sell portfolio companies — trade at single-digit discounts, reflecting their strong growth profiles, while venture funds — which often take longer to achieve liquidity — continue to price at much wider discounts.

Broadly speaking, there are two ways to generate returns in secondaries: 1) the initial discount at purchase, and 2) the appreciation of assets after acquisition. In our view, a discount-driven strategy is risky in slow exit markets, as it relies on swift liquidity to monetize the discount. Buying fundamentally sound and resilient assets, even at higher prices, offers more optionality to generate returns.

Are continuation funds primarily a liquidity generation tool or are there other reasons for GPs to consider doing these deals?

While many GPs did their first continuation vehicle (CV) transaction during the Covid pandemic to generate distributions to their LPs while exit markets were closed, there are other attractive features of these types of deals aside from simply producing liquidity for LPs. Investing their capital in calibrated assets that they have managed for many years presents a compelling risk-adjusted opportunity for their personal capital, while they also have the potential to earn incremental carried interest on the transaction. As a result, we have now seen many GPs complete multiple continuation funds given their positive experience in prior deals.

Several managers have used CVs as an exit route for existing CVs – how should these transactions be viewed in terms of the opportunities and risks they present for investors?

CVs of CVs — or so-called CV squareds — are logical to us. If a company has performed well across an initial buyout and one CV, it is clearly calibrated under the GP’s ownership and could be well-poised to continue its value-creation plan.

There are however relevant questions that investors should ask. If the asset has now outperformed twice, it may have grown beyond the market segment in which the GP has been successful historically. Similarly, larger deals may be dependent on the IPO market as an exit route, which introduces more risk.

Several buyout managers have entered the secondary market through CVs. What impact has this had on competitive dynamics?

We consider it a positive signal for the secondary market that new parties, including several large and sophisticated managers, have recognized the opportunity set and moved into the space. Historically, the market for single-asset continuation vehicles (SACVs) has been the most under-capitalized part of the secondary market, as many diversified secondary funds are limited in their ability to deploy into these deals. The entrance of new participants alleviates that pressure and should lead to shorter lead times as GPs build out the books, particularly for larger transactions.

HarbourVest has been investing in private equity for over 40 years. How does the firm assess secondary opportunities across other private market asset classes?

Private equity is the largest and most mature part of the secondary market for private funds. Historically we saw opportunistic transactions in other assets classes without dedicated pools for them.

That has now changed, though. Over the past ten years, the infrastructure secondaries market has grown from $3 billion in 2015 to $20 billion in 2025. Private credit secondaries have grown as large over an even shorter period of time, also reaching $20 billion in activity last year.

Investing in both other asset classes via secondaries introduces attractive structural features that can accelerate and enhance returns. Given the differentiated risk/return profiles of these strategies, we expect to see increasing numbers of LPs create dedicated allocations.

With the rapid growth of evergreen secondary funds, what has been the impact on the market?

To date the impact of evergreen secondary funds has been relatively limited, as most of these vehicles are small compared to closed-end funds and many invest alongside the GP’s flagship program. Evergreens are not yet sufficiently scaled to participate on a standalone basis at the larger end of the market, where HarbourVest invests. That said, we do expect them to grow as new types of investors and markets open up to secondary fundraising. HarbourVest evergreens have also attracted robust interest from our institutional investor partners, suggesting that the operational benefits are at least as interesting as the potential for liquidity.

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Looking ahead, how do we expect the secondaries market to evolve over the next few years?

The trends that have driven the secondary market to $225 billion of transaction volume in 2025 are largely secular, so we expect the size of the market to continue to grow and the types of investors who participate to continue to broaden.

In the shorter term, the liquidity environment will drive new sellers into secondary transactions, and we expect many of them to become repeat sellers, making annual deal flow stickier.

Given the rapid growth in secondaries in newer asset classes, we expect those markets to reach comparable turnover rates to private equity in the medium term.

In turn, we believe this evolution will lead many LPs to view secondaries as a structurally attractive way to add private markets exposure to their portfolios, irrespective of strategy.

Disclosure

Dislcaimer

Diversification does not ensure a profit or protect against a loss.

HarbourVest Partners, LLC is a registered investment adviser under the Investment Advisers Act of 1940. This material is solely for informational purposes and should not be viewed as a current or past recommendation or an offer to sell or the solicitation to buy securities or adopt any investment strategy. The opinions expressed herein represent the current, good faith views of the author(s) at the time of publication, are not definitive investment advice, and should not be relied upon as such. This material has been developed internally and/or obtained from sources believed to be reliable; however, HarbourVest does not guarantee the accuracy, adequacy, or completeness of such information. There is no assurance that any events or projections will occur, and outcomes may be significantly different than the opinions shown here. This information, including any projections concerning financial market performance, is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. The information contained herein must be kept strictly confidential and may not be reproduced or redistributed in any format without the express written approval of HarbourVest. Nothing herein should be construed as a solicitation, offer, recommendation, representation of suitability, legal advice, tax advice, or endorsement of any security or investment and should not be relied upon by you in evaluating the merits of investing in HarbourVest funds or any other investment decision.

An investment in the private markets involves high degree of risk, and therefore, should be undertaken only by prospective investors capable of evaluating the risks of the Fund and bearing the risks such an investment represents. The following is a summary of only some of the risks of investing in private markets.

Secondary Investing Risks.

Secondary market transactions may impose higher costs than other investments and may require a fund to assume contingent liabilities associated with events occurring prior to the Fund’s investment. The overall performance of an Underlying Portfolio Fund acquired through a secondary transaction will depend in large part on the purchase price paid. In addition, a fund will generally not have any ability to negotiate terms with respect to interests in Underlying Portfolio Funds invested in through secondary market transactions.

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For additional legal and regulatory information related to other HarbourVest offices and countries please refer to https://www.harbourvest.com/important-office-and-country-disclosures/

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