A market that is becoming infrastructure
Lazard estimated $124 billion of secondary transaction volume in the first half of 2026, up about 28% year on year, with GP-led and LP-led activity both at record first-half levels. Lazard described secondaries as a structurally growing source of liquidity and portfolio management, while noting that buyers were sharpening underwriting discipline amid wider software bid–ask spreads.
IPEM’s 2026 agenda used similarly structural language, asking how a maturing secondary market changes active portfolio management and capital allocation. The point is not that every strategy has suddenly become liquid. It is that secondaries are becoming a more regular part of how institutions manage exposure, duration and liquidity.
What is actually being underwritten?
A secondary buyer is not simply underwriting whether an underlying company or portfolio is “good.” The investment case is conditional on the transaction.
- Asset quality: what is true about the company or portfolio?
- Entry price: what risk is already reflected in the economics?
- Structure: what rights, restrictions, fees or mechanics change the payoff?
- Information quality: what can actually be concluded from the available evidence?
- Duration and liquidity: how long can capital remain exposed and what exit paths are plausible?
- Mandate fit: is this risk attractive for this pool of capital, not just in the abstract?
Mercer’s review of 148 secondary transactions makes the same point for GP-led deals: valuation cannot be read from headline discount alone. Comparable valuations, revenue and earnings, margins, cash flow, fees, carry, leverage, rollover, governance and exit route interact.
The emerging constraint: underwriting attention
As opportunity sets expand, the scarce resource may not always be raw deal flow. For sophisticated teams it can be the capacity to decide which plausible opportunities deserve another cycle of work.
The obvious “no” is cheap. The expensive case is often the opportunity that remains attractive enough to keep consuming analyst time, senior judgment and external diligence before the binding constraint becomes clear.
Good screening is not rejecting more deals. It is assigning the right level of work to each opportunity.
A practical decision architecture
ClarityInvest uses five possible next routes rather than a binary diligence/pass frame:
- Stop: the opportunity has not earned another cycle.
- Investigate: one specific uncertainty could change the case.
- Reprice: the asset may work but the current economics do not.
- Restructure: the binding problem is in transaction mechanics.
- Full underwrite: the opportunity has earned deeper work.
This is an independent pressure-test framework, not a substitute for valuation, legal diligence or the investment team’s judgment.
Go deeper by decision
- What is a direct secondary transaction?
- How do investors price a private-company secondary?
- What information should exist before more diligence?
- What makes a secondary reprice rather than get rejected?
- How does direct-secondary underwriting differ from primary underwriting?
- What does mandate fit mean in secondary investing?
Key takeaway
As secondaries mature, the question moves from “Can we access this?” toward “What does this opportunity deserve next?” That makes underwriting prioritization a capital-allocation problem in its own right.
Sources and notes
- Lazard, Interim 2026 Secondary Market Report — market volume, GP-led/LP-led activity and underwriting discipline.
- IPEM Global 2026 agenda — active portfolio management and evolving private-market liquidity.
- Mercer, Private markets in motion: navigating secondaries — holistic valuation and GP-led underwriting factors.
- Morgan Lewis, Annual Continuation Vehicles Report 2026 — structure, governance and alignment across 169 continuation vehicles.