Keep pulling the thread on Jon Madorsky.
The private equity secondary market volume is estimated to reach $170 to $180 billion in 2024, a significant increase from $20 billion in 2010.
By 2020, the secondary market was composed of approximately 50% GP-led transactions and 50% LP-led transactions, a stark contrast to 2010 when it was almost entirely LP-led.
In 2024, a significant development in the secondary market is the large inflow of retail capital through 40 Act funds, which creates pressure for managers to deploy capital quickly.
Prominent institutional LPs, including Yale University and Harvard University, have recently offered large private equity portfolios for sale on the secondary market.
Jon Madorsky predicts the private equity market will evolve to mirror the public equity market, segmenting into index-like retail products, specialized active funds, and boutique "hedge fund" style managers.
Investment bankers claim that 40-act funds are paying a premium of 200 to 500 basis points for secondary positions compared to traditional institutional funds.
The private equity secondary market volume is projected to be around $190 billion in 2025.
The annual rate of liquidity distributions to limited partners has fallen from a historical average of 15-20% of total commitments to 10% or less in recent years.
Jon Madorsky believes the private equity secondary market could easily grow to $400 billion or $600 billion in annual volume.
Traditional private equity firms such as Leonard Green & Partners, ADVEQ, and New Mountain Capital have announced they are raising funds to enter the secondary market, primarily focusing on GP-led transactions.
RCP has become one of the largest managers focused on North American lower middle market buyouts.
Prior to 2007, private equity asset valuation was often based on the lower of cost or market, until FASB rule 157 mandated a shift to a mark-to-market methodology around 2006.