Primary vs Secondary Private Equity
Understand the difference between new capital into companies (primary) and trades of existing interests (secondary) to pick the right path in 2026
Deal mechanics and stakeholder map
Who is involved and how the process differs
Primary: closing mechanics
- • Parties: Company, new investor(s), existing lenders, key shareholders
- • Docs: SPA/Subscription, SHA, disclosure schedules, debt consents
- • Conditions: Regulatory/antitrust, financing, MAC, board approvals
- • Post‑close: 100‑day plan, integration, KPI cadence, add‑on pipeline
Secondary: consent & transfer mechanics
- • Parties: Seller (LP/founder), buyer, GP/company, administrator
- • Docs: Transfer agreements, side letters, GP consent, NAV package
- • Nuances: ROFR/ROFO, fees carry‑forward, unfunded commitments
- • Timeline: Often faster, but dependent on GP/company approvals
Quick comparison
Key differences at a glance
- Aspect
- Primary
- Secondary
What is a Primary investment?
Primary deals inject new capital into a company or fund in exchange for newly issued securities. Capital fuels growth, acquisitions, or recapitalizations and often comes with board representation and covenants.
Common structures:
- • Minority growth rounds (preferred equity)
- • Majority buyouts and recapitalizations
- • Primary commitments into new PE/GE funds
What is a Secondary investment?
Secondary deals purchase existing stakes from current holders. Transactions include LP interest sales in funds, GP‑led restructurings, and direct secondaries of company shares for early shareholders.
Common structures:
- • LP secondaries (LP sells fund interests)
- • GP‑led tenders/continuation vehicles
- • Direct secondaries (founder/employee liquidity)
Real-world examples
Notable primary and secondary PE transactions
Blackstone Growth Fund
Primary
$1.2B
Primary investment providing new capital to portfolio companies for expansion, acquisitions, and strategic initiatives.
Lexington Partners
Secondary
$15B
Leading secondary buyer acquiring LP interests in PE funds, providing liquidity to institutional investors.
Goldman Sachs Growth
Primary
$800M
Primary growth equity rounds injecting new capital into high-growth companies for scaling operations.
Economics and returns
Where returns come from in primary vs secondary
Primary
Value creation through growth and operational improvements
- Return DriversRevenue growth, margin expansion, multiple uplift
- Dilution/OwnershipNew equity issued; negotiated control/minority rights
- RiskExecution risk on plan and integration
Secondary
Returns from pricing inefficiencies and duration management
- Return DriversDiscount to NAV, faster distributions, selection
- Dilution/OwnershipNo new equity issued; transfer of existing rights
- RiskVintage/asset quality, GP alignment, consent risks
The role of VDRs in primary and secondary deals
From company diligence to LP interest transfers
Primary
- • Company diligence rooms (financial, legal, commercial)
- • Integration/100‑day plans and board reporting
- • Add‑on pipeline tracking
Secondary
- • LP interest sales with document packs
- • GP‑led continuation vehicle data rooms
- • Consent/transfer workflows and audit trails
When to choose Primary vs Secondary?
Select the right structure for your objective
Choose Primary when:
- The company needs new capital for growth or deleveraging
- You want governance rights and alignment on a forward plan
- Control or meaningful minority stakes are desired
Choose Secondary when:
- LPs or early shareholders require liquidity
- You seek diversification, shorter duration, or discounted entry
- Participation in GP‑led processes or continuation vehicles