What role do secondary advisory firms serve for Limited Partners?

Secondary advisory firms play a crucial role for Limited Partners (LPs) by facilitating transfers of private equity interests. This function addresses the liquidity needs of LPs who may want to sell their commitments to a private equity fund before the fund matures. By providing a marketplace for these transactions, secondary advisory firms enable LPs to realize cash flows from their investments at different stages of the fund’s lifecycle.

This role is particularly important as LPs often face situations where they need to rebalance their portfolios or improve liquidity, making it necessary for them to understand and navigate the secondary market. Secondary advisory firms have the expertise to connect sellers with potential buyers, enhance transparency in pricing, and ensure that transactions are executed efficiently.

In contrast, other options do not accurately reflect the primary function of secondary advisory firms. Creating new funds for General Partners (GPs) involves different strategic activities and relationships with fund managers, which falls outside the advisory scope related to secondary market transactions. Providing debt financing is more aligned with financial institutions or lenders rather than advisory firms focused on secondary transactions. Lastly, acquiring new assets directly typically relates to investment firms seeking to build their portfolios, which does not align with the roles that secondary advisory firms perform for LPs.