---
title: "What Is Secondaries?"
term: "Secondaries"
description: "Secondaries are transactions where existing ownership — LP fund interests, company shares, or GP stakes — changes hands between parties other than the company issuing new stock in a primary round."
date: 2026-07-25T00:00:00.000Z
updated: 2026-07-25T00:00:00.000Z
topics: ["fund-economics", "private-equity"]
source: https://venturecapitaltracker.com/glossary/secondaries
---

# What Is Secondaries?

> Secondaries are transactions where existing ownership — LP fund interests, company shares, or GP stakes — changes hands between parties other than the company issuing new stock in a primary round.

**Secondaries** cover any resale of private market positions — fund LP interests, company shares, or GP economics — as opposed to primary capital going into the issuer.

## How it works

Common flavors include **LP secondaries** (an institution sells its interest in Fund III to a secondary fund), **direct secondaries** (a shareholder sells private company stock to another investor), and **GP-led** processes where the manager rolls assets into a continuation vehicle while offering partial liquidity to existing LPs.

Pricing is negotiated, often at a discount to the latest NAV or last primary valuation. Buyers diligence the underlying portfolio, transfer restrictions, and any ROFR or co-sale rights. Company consent may be required for direct share transfers.

The secondary market has grown as funds hold assets longer and LPs seek earlier liquidity. Dedicated secondary funds and hybrid strategies now sit alongside traditional buyout and venture firms.

## Why it matters

- **LPs:** Secondaries are an exit valve when rebalancing or meeting cash needs — but discounts and selection bias (selling weaker positions) are real risks.
- **GPs:** Continuation funds can align LPs who want to hold with those who want out, while keeping prized assets under management.
- **Investors:** Direct secondaries affect cap table composition and signaling; large insider sales warrant scrutiny.

## Common mistake

Assuming a secondary price equals "fair value" for the whole company — it reflects buyer constraints, illiquidity, and often a minority stake discount.

## Related ideas

- [Secondary sale](/glossary/secondary-sale)
- [Secondary fund](/glossary/secondary-fund)
- [Secondary liquidity](/glossary/secondary-liquidity)

## FAQ

### What is Secondaries in simple terms?

Instead of the company raising a new primary round, an existing shareholder sells their stake to someone else — or an LP sells its fund commitment to a secondary buyer. The company may not receive new capital; ownership just transfers.

### Why does Secondaries matter?

LPs gain liquidity before fund end dates. GPs use continuation vehicles and strip sales to hold winners longer. Pricing often reflects a discount to last mark, affecting reported portfolio values and manager relationships.


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Source: https://venturecapitaltracker.com/glossary/secondaries