Private capital secondaries set for record $250bn year as LP liquidity needs grow

The private capital secondary market is poised for a record $250 billion in transactions this year, according to a Bloomberg report quoting Nigel Dawn, global head of private capital advisory at Evercore. The market, which reached an unprecedented $121 billion in the first half of 2026, is expanding due to large limited partners (LPs) using secondaries to generate liquidity as private equity portfolios generate fewer distributions than expected.

Dawn notes that secondaries have shifted from a specialist exit route to a crucial component of the private markets infrastructure. General partner-led transactions have become the largest segment, surpassing traditional LP-led sales. Single-asset continuation vehicles are particularly prominent, allowing GPs to retain high-quality assets with growth potential while enabling existing investors to realize some or all of their holdings.

Despite its rapid growth, the secondary market remains relatively small, accounting for only about 2% of global private assets under management, indicating ample room for further expansion. Evercore forecasts an additional $150 billion of capital to be raised in the second half of the year. The market's evolution is also reflected in the treatment of software assets, where continuation transactions have dropped due to concerns about AI's impact on business models and valuations.

However, activity in software-related deals is beginning to recover, with investors showing greater selectivity. Vertical software businesses with defensible positions and AI-enhancing applications are receiving more interest, while horizontal software companies face increased scrutiny due to AI's potential impact on pricing and customer retention.

This change highlights a more detailed assessment by secondary investors of which software businesses can maintain their competitive advantages amidst accelerating AI adoption. Pricing in the broader buyout secondary market is now closer to equilibrium, with around 90% of valuations used as effective transaction prices, indicating a narrowing gap between buyer expectations and seller pricing.

The surge in demand for liquidity from LPs, increased use of continuation vehicles by GPs, and growing institutional participation is establishing secondaries as a mainstream element of private equity portfolio management. With $121 billion in transactions already completed in the first six months of 2026, the market is on track for a year that could solidify the role of secondaries in the private capital ecosystem.