How do GP-led secondary transactions differ from LP-led secondary transactions?

GP-led secondary transactions are characterized primarily by the general partner (GP) taking action to facilitate the transfer or restructuring of assets or companies within a private equity fund. In these scenarios, the GP actively engages in managing the transition, which can include providing liquidity to existing investors or restructuring the portfolio to maximize value. This involvement from the GP is essential in driving the transaction, as they typically have a better understanding of the assets and the market conditions.

The nature of GP-led transactions allows for greater control and flexibility over how the underlying investments are handled, which can lead to more tailored solutions for investors looking to exit or for funds aiming to refresh their capital base. By focusing on both selling and restructuring assets or companies, GP-led transactions cater to various strategic goals, making them a significant part of secondary market dynamics.

In contrast, LP-led secondary transactions are generally initiated by limited partners (LPs) looking to sell their interests in a fund to other investors. While there may be restructuring involved, it is primarily about the transfer of interests rather than the GP's proactive role in managing or transforming those assets.

This distinction highlights why the correct answer correctly identifies that GP-led transactions include a broader range of activities, emphasizing the GP's role in not only selling but also potentially