Key Takeaways
- • McKinsey's latest Global Private Markets Report concludes that liquidity solutions built by the private equity industry in recent years, including partial realizations and secondary transactions, will remain a permanent feature of the ecosystem even as liquidity conditions improve.
- • Global secondary transaction volume grew 48% to $240 billion in 2025, surpassing its 2024 record, as GPs and LPs pursued liquidity amid low distributions.
- • GP-led transaction volume, driven by greater use of continuation vehicles, reached $115 billion in 2025, even as the IPO market rebounded.
- • McKinsey states that LPs are "demanding more than just paper returns," pushing GPs and LPs to rely on a full suite of liquidity tools rather than traditional exits alone.
- • Lengthening holding periods for private equity assets are prompting GPs to generate liquidity from aging portfolio companies through partial realizations.
Summary
Private equity is recovering from the liquidity constraints of recent years, and McKinsey expects the liquidity solutions the industry has developed to remain a lasting part of the market, according to the consultancy's latest Global Private Markets Report. Although performance figures have improved and liquidity has eased somewhat, McKinsey argues that these vehicles have earned a permanent place in the private equity ecosystem. The firm's message to the industry is direct: "LPs are demanding more than just paper returns."
According to McKinsey, limited partners and general partners are increasingly relying on a full range of liquidity solutions, including partial realizations and a more robust secondary market. Partial realizations provide managers with temporary liquidity relief, which they can pass on to LPs facing capital calls from their alternative investment programs. The consultancy notes that, as holding periods for private equity assets lengthen, "partial realizations show that GPs are increasingly recognizing the viability of generating liquidity from an aging asset."
Secondary activity reached new highs in 2025. Secondary transactions surpassed their 2024 record, rising 48% to $240 billion, a figure McKinsey attributes to "the ongoing pursuit of liquidity in an environment of low distributions." GP-led transaction volume reached $115 billion last year, fueled by greater use of continuation vehicles even as the IPO market rebounded.
Taken together, these developments lead McKinsey to conclude that liquidity solutions will continue to be a prominent feature of private equity despite improving market conditions.
According to McKinsey, limited partners and general partners are increasingly relying on a full range of liquidity solutions, including partial realizations and a more robust secondary market. Partial realizations provide managers with temporary liquidity relief, which they can pass on to LPs facing capital calls from their alternative investment programs. The consultancy notes that, as holding periods for private equity assets lengthen, "partial realizations show that GPs are increasingly recognizing the viability of generating liquidity from an aging asset."
Secondary activity reached new highs in 2025. Secondary transactions surpassed their 2024 record, rising 48% to $240 billion, a figure McKinsey attributes to "the ongoing pursuit of liquidity in an environment of low distributions." GP-led transaction volume reached $115 billion last year, fueled by greater use of continuation vehicles even as the IPO market rebounded.
Taken together, these developments lead McKinsey to conclude that liquidity solutions will continue to be a prominent feature of private equity despite improving market conditions.
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