Over the past year, secondary deals have returned to the forefront of the high-tech sector after a period of slowdown. In a secondary transaction, new investors purchase existing shares from employees or early investors, rather than injecting new capital directly into the company.
During the accelerated growth years of 2020 and 2021, secondaries grew rapidly. When the market cooled in 2022 and 2023, activity became more selective and cautious. By 2024, however, secondary deals accounted for more than 70 percent of exits in the venture capital market. This shift reflects the growing role of secondaries as a primary mechanism for managing liquidity for both investors and companies. One key reason is the scarcity of traditional exits and IPOs. Secondary transactions allow early investors to realize part of their position when the wait for a public offering or acquisition is prolonged, and they help companies improve employee retention by enabling partial liquidity for team members.
Historically, most secondary transactions took place privately and were largely inaccessible to family offices and other private investors. Barriers included the absence of platforms offering reliable information and the complexity of legal and operational processes. As a result, participation was typically limited to those with extensive professional networks or specialized expertise. In recent years, this dynamic has changed significantly.
The emergence of dedicated private-market trading platforms, many supported by advanced data and AI tools, has reshaped the landscape. These platforms improve transparency, simplify documentation, and made price discovery much faster and more efficient. Information regarding private companies and planned transactions is now more readily available, transforming secondaries from a specialized niche tactic into a central liquidity and portfolio management tool.
For family offices and long-term investors, this shift creates an attractive opportunity. Secondaries can provide exposure to mature technology companies while maintaining greater flexibility and a shorter expected exit timeline compared to traditional early-stage investments. Beyond their strategic role, they now serve as a major source of liquidity across the private market. For investors seeking a thoughtful balance between return, liquidity, and access to quality companies, secondaries are becoming an essential part of the toolkit. As the private market evolves to function more similarly to the public market in structure and transparency, the prominence of secondary transactions continues to grow.
Many family offices and private investors often lean toward long-term investments, including opportunities with social or technological impact in sectors such as healthcare, life sciences, and breakthrough innovation. These areas tend to involve long development cycles, which can lock significant capital in illiquid assets. Even investors willing to commit for the long term require ways to balance patience with ongoing liquidity needs. Secondary transactions offer a targeted solution by enabling investment in companies that are already operating at a more advanced stage, often with a clearer path to exit.
Evaluating whether a secondary transaction is attractive requires examining several core factors. The company’s stage of development is critical. Secondaries typically focus on companies with proven business models, which lowers risk relative to earlier-stage investments. The company’s industry influences the likelihood and speed of a future liquidity event. For example, cybersecurity and SaaS sectors often have active acquisition markets and shorter exit cycles, making them well suited to secondaries. In contrast, biopharmaceuticals, health and life sciences, and other R&D-intensive fields involve longer timelines and greater uncertainty, which often makes direct equity investment more appropriate than secondary participation.
The company’s strategic direction should also be evaluated. Today, with broader access to information, investors can assess a company’s performance, capital structure, and growth plans with greater precision. The structure of the transaction itself also matters. Investors should understand whether shares are purchased directly from a shareholder or via an intermediary, and whether fees or layered costs may reduce net returns.
Finally, establishing a clear exit strategy from the outset is essential. In secondary transactions, investors are typically positioning themselves ahead of an anticipated liquidity event such as an IPO, a strategic acquisition, or a future secondary sale. Clarity regarding investment objectives and timeline is therefore a core component of successful participation in the secondary market.
For investors building long-term portfolios, secondaries can serve as an effective tool for balancing growth and liquidity. By combining early exposure to innovation with selective positions in more mature companies, investors can participate in value creation while maintaining flexibility in capital deployment. Secondaries offer a way to access established companies, manage risk through clearer visibility into performance, and plan for defined exit horizons. As the private market continues to professionalize and operate with greater transparency, secondaries are increasingly becoming a practical part of disciplined portfolio strategy.
Eric Bentov is the Co-founder and Managing Partner at Arieli Group.