Key Takeaways
- • Global secondary transaction volume surged to $226 billion in 2025, representing 41% year-over-year growth, driven by constrained exit markets and extended private company holding periods that are pushing investors toward continuation vehicles as a core liquidity strategy.
- • Mercer's analysis of 150 transactions (2021–2025) demonstrates pricing discipline in GP-led continuation deals: 59% closed at a discount to NAV, 40% at par, and only 1% at a premium, with an average settlement discount of approximately 8%.
- • Management fees across continuation vehicles show standardization, averaging 0.85% with most clustered between 0.75% and 1%, while tiered carry arrangements with 20% as the most common maximum carry level provide investors clearer comparability across deals.
- • Continuation vehicles have transitioned from a niche liquidity tool to a mainstream, institutionalized segment of the private markets ecosystem, with significant implications for financial advisors managing client exposure to private equity positions.
- • Deferred consideration structures remain frequently misunderstood by investors, representing an area requiring greater advisor education as these arrangements become more prevalent in secondary transactions.
Summary
The private markets secondaries sector has evolved into a fundamental portfolio management strategy rather than a peripheral liquidity mechanism, according to research from Mercer that carries direct implications for wealth advisors and institutional investors with substantial private equity allocations. Global secondary transaction volume reached $226 billion in 2025, marking a 41% increase year-over-year, as investors increasingly face constrained traditional exit markets and extended holding periods for private companies. This growth has pushed continuation vehicles—structures that allow investors to extend their exposure to portfolio companies rather than exit—into mainstream use across institutional investment portfolios.
Benjamin Baumann, Mercer's global head of secondaries, emphasized that continuation vehicles are now "evolving into a durable, institutionalized segment of the private markets ecosystem," driven by structural market dynamics: growing capital commitments to private markets, companies remaining private longer, and rising investor sophistication. The research foundation—analyzing approximately 150 transactions spanning 2021 to 2025—offers empirical clarity on how these structures are functioning in practice, addressing longstanding concerns about valuation discipline and fee opacity.
Pricing data from the Mercer study directly challenges criticism that GP-led deals lack discipline. The analysis found that 59% of transactions closed at a discount to net asset value, 40% at par, and just 1% at a premium, with an average settlement discount of around 8%. This distribution suggests a more balanced market than skeptics have suggested, with the vast majority of deals priced either at or below NAV. Fee structures similarly exhibit standardization: management fees averaged 0.85% across the sample, with the preponderance falling between 0.75% and 1%. Carry arrangements show convergence as well, with 20% maximum carry emerging as the most common structure—a trend that enhances comparability across deals and simplifies due diligence for advisors evaluating options for clients.
One structural feature the Mercer research identifies as "frequently misunderstood" is deferred consideration—arrangements where payment for secondary positions occurs over time rather than upfront. This complexity underscores the need for financial advisors to develop deeper expertise in continuation vehicle mechanics, particularly as these instruments become routine components of private markets portfolio management. As private company holding periods extend and traditional exit windows narrow, continuation vehicles are transitioning from exceptional liquidity events into standard portfolio rebalancing tools for institutions and sophisticated investors managing illiquid private equity exposure.
Benjamin Baumann, Mercer's global head of secondaries, emphasized that continuation vehicles are now "evolving into a durable, institutionalized segment of the private markets ecosystem," driven by structural market dynamics: growing capital commitments to private markets, companies remaining private longer, and rising investor sophistication. The research foundation—analyzing approximately 150 transactions spanning 2021 to 2025—offers empirical clarity on how these structures are functioning in practice, addressing longstanding concerns about valuation discipline and fee opacity.
Pricing data from the Mercer study directly challenges criticism that GP-led deals lack discipline. The analysis found that 59% of transactions closed at a discount to net asset value, 40% at par, and just 1% at a premium, with an average settlement discount of around 8%. This distribution suggests a more balanced market than skeptics have suggested, with the vast majority of deals priced either at or below NAV. Fee structures similarly exhibit standardization: management fees averaged 0.85% across the sample, with the preponderance falling between 0.75% and 1%. Carry arrangements show convergence as well, with 20% maximum carry emerging as the most common structure—a trend that enhances comparability across deals and simplifies due diligence for advisors evaluating options for clients.
One structural feature the Mercer research identifies as "frequently misunderstood" is deferred consideration—arrangements where payment for secondary positions occurs over time rather than upfront. This complexity underscores the need for financial advisors to develop deeper expertise in continuation vehicle mechanics, particularly as these instruments become routine components of private markets portfolio management. As private company holding periods extend and traditional exit windows narrow, continuation vehicles are transitioning from exceptional liquidity events into standard portfolio rebalancing tools for institutions and sophisticated investors managing illiquid private equity exposure.
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