Stuck positions
What is a secondary market transaction?
A secondary market transaction is when someone who already owns a private market interest sells it to someone else. The existing position moves, along with its economics, rights, and every complication attached to it.
The word 'secondary' covers four structurally different deals. A direct secondary is a share transfer between a founder, early employee, angel, or seed fund and a new buyer. An LP interest transfer moves a fund stake, not the underlying companies. A continuation vehicle is a GP-led deal where existing LPs choose to exit or roll into a new structure. Single-purpose SPVs are a newer layer, purpose-built to acquire secondary shares or LP interests in specific companies.
Pricing almost always reflects a discount to the last round valuation, but that discount is not the same as a discount to fair value. The bid is pricing time to liquidity, dilution risk, information asymmetry, uncertainty about which rights actually transfer, and the opportunity cost of illiquid capital. Premiums do exist, but they're rarer and usually appear close to a credible IPO with a clean cap table.
The part buyers underestimate is transfer mechanics. Most shareholder agreements carry a right of first refusal or a company consent right. Either can freeze or kill a deal after price is agreed. We spend a lot of time on exactly these situations, helping family offices and companies work through stuck or illiquid private market positions where the path to liquidity is more complicated than a simple share transfer.