How is pricing typically set for secondary transactions?

The pricing for secondary transactions is typically set as a percentage of a primary fund's net asset value (NAV) due to various reasons related to the nature of the assets involved. The NAV reflects the current value of the assets held by a fund, and it provides a standardized measure to assess the fund's worth. In secondary transactions, potential buyers analyze the underlying assets' performance and future cash flows, but using the NAV as a basis ensures that all parties have a common understanding of the fund’s value.

This approach helps maintain a level of consistency in pricing, taking into account the current market conditions and the specific attributes of the fund's investments. Secondary transaction prices can fluctuate based on investor interest and market dynamics, but they are often anchored to the NAV to provide a fair and transparent valuation for both buyers and sellers.

By contrast, the other options reflect less common methodologies or may not accurately capture the nuances of the secondary market. For example, a fixed amount based on investor demand does not account for the comprehensive assessment of a fund's value or performance, while comparing to public market equivalents might not be directly applicable to all types of private funds. Finally, relying on a bidding war could lead to volatility and doesn't provide a structured valuation method that is typically favored