What is one key risk associated with GP-led secondary transactions?

In GP-led secondary transactions, the general partner (GP) taking on dual roles as both buyer and seller introduces potential conflicts of interest. This situation raises questions about the fairness of the transaction, as the GP might prioritize their own interests over those of the limited partners (LPs). For example, the GP could manipulate the terms or valuations in a way that benefits them while potentially disadvantaging the LPs. As a result, LPs may feel uncertain about whether the GPs are acting in their best interests or merely seeking to maximize their own benefits, which underscores the inherent risk in these types of transactions.

The other options are less relevant to the specific risks posed in GP-led secondary transactions. High liquidity in investments does not correlate with the GP's dual role risk, and consistent valuation across investments is not typically a characteristic of these kinds of transactions, where differing valuations may lead to disputes. Lastly, guaranteed approval from all LPs is not a realistic expectation in these cases, as varying opinions and interests naturally exist within the investor group, further complicating the transaction dynamics.