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Navigating the secondary market is like setting the itinerary for a trip. Picking a destination is one thing. Figuring out where to go and what to do once you’re there is another entirely.
There are many variables to consider when planning to invest in secondary markets — and equally as many opportunities. For those looking to invest in private markets, it’s important to understand these complexities first, before plotting a route to success.
We’ve already broken down the differences between primary vs. secondary markets, and public vs. private secondary markets. Now, let’s look at some of the benefits of investing in the latter.
Secondary markets are exactly what they sound like: a place where an existing position changes hands, rather than new capital going into the issuer. In the primary market, investors fund a new round, a new fund, or a new allocation. In secondaries, ownership is transferred from one holder to another via secondary sales—often to solve for liquidity, portfolio rebalancing, or timing.
In the broader private ecosystem, “secondaries” can refer to two related (but distinct) arenas in the market for private assets:
These are direct investments in privately held companies where employees, early investors, or funds sell existing shares. This is part of the evolving private market landscape, and it matters because it can create a path to liquidity without waiting for an IPO.
In a private equity secondary, the asset being traded is usually a fund interest (or a portfolio held inside a continuation structure), not newly issued shares. These are commonly referred to as fund secondaries, and the value is tied to the underlying portfolio companies and the fund’s cash flows, fees, and terms.
Both sit within the same financial market reality: private assets are growing, exits can be unpredictable, and investors want more flexibility in how they manage exposure across the private equity market.
There are several types of secondary transactions, and knowing the difference helps you understand why pricing, timing, and approvals vary from deal to deal.
In an LP-led transaction, a limited partner sells its interest in an existing fund. Buyers step into the seller’s position—taking on the remaining rights and obligations of the fund interest. This is the classic fund secondaries model and is often used to rebalance exposure across private equity portfolios.
GP-led secondaries are initiated by the fund manager rather than an LP. Typically, the GP moves one or more assets into a new investment vehicle (often called a continuation vehicle), giving existing investors options such as selling, rolling, or adding capital.
Because the assets are already owned, gp-led secondaries often center on price discovery and process design—what’s being transferred, who can participate, and how governance works. They’ve become a major part of the modern private equity secondary market as managers look for flexibility on timing and exits.
Direct secondaries involve buying or selling shares in underlying companies outside a fund structure. These are usually positioned as direct investments and can appeal to private market investors who want targeted exposure rather than a “blind pool.”
A secondary transaction is more than “buyer meets seller.” It’s a coordinated process that can involve multiple stakeholders, different approval layers, and real trade-offs on timing and market pricing.
Define what’s being sold
In fund deals, the asset is a fund interest tied to underlying investments and governed by the fund’s terms. In direct deals, it’s a position in underlying companies with transfer restrictions.
Information sharing and diligence
Buyers review fund reports, exposure details, and terms that affect value. For fund interests, this often means understanding the composition of the fund’s holdings, cash flows, and any remaining unfunded commitments.
Pricing often references net asset value for fund interests, but deal reality depends on supply/demand, timing, and market valuations. The result is negotiated market pricing that can be at a discount or premium to last reported marks.
Transfers often require consents—fund-level approvals, company approvals, or both. This is where secondaries differ from public markets: transfer restrictions are common, and documentation is part of the process.
Closing and settlement
Once approvals are complete, parties finalize documentation, settle consideration, and update ownership records. The buyer effectively steps into the seller’s position, including ongoing fund obligations where applicable.
Secondaries may offer a different cash flow experience than a brand-new primary commitment. Buying into a more seasoned fund interest can reduce blind pool risk because the buyer is often purchasing exposure to assets that already exist and have observable performance history—rather than making a new investment into a fund with unknown future deals.
This can be particularly relevant when investing capital with a portfolio construction lens—where the goal is to improve portfolio benefits like pacing, exposure balance across vintage year cohorts, and liquidity planning, while still gaining access to alternative investments and the long-term upside of private markets.
The secondary market plays a crucial role in the market’s liquidity, which refers to the ease with which an investment can be sold.
By providing the ability to buy and sell assets quickly, the secondary market increases the flow of activity, allowing investors to access cash without diminishing an asset's value. Regulated exchanges like the Nasdaq or NYSE facilitate efficient pricing of stock through continuous trading. Because of this, shares of public companies are typically considered highly liquid.
The same hasn’t been said for stock in private companies — or, at least, not historically. In the past, there weren’t many avenues for shareholders of private companies to turn their holdings into cash, short of an acquisition.
But that’s not necessarily the case anymore. Augment Capital provides a private stock marketplace for trades between shareholders of private companies and accredited investors looking to buy in. While this can potentially enhance liquidity for private company shares, it's important to note that trading these shares may involve different risks compared to public companies. Investors should consider these factors carefully.
It’s best practice for any portfolio to be diversified, or for the investments within it to be spread across various asset classes.
This is especially true when investing in private markets, where there is still relatively less liquidity compared to public markets, and consequently a higher risk profile. Fortunately, there is no shortage of opportunities for diversification in secondary markets.
Augment enables investors to purchase stock in companies not traded on public exchanges, such as Databricks, Scale AI, and Stripe. These private firms may not be subject to the same market shocks as public ones, and could potentially provide unique protection to portfolios.
You’ve heard of “first-mover advantage” — the competitive edge gained by a company that establishes itself early in an emerging sector. More often than not, startups enjoy this advantage instead of publicly traded companies. For a public company, “moving first” would be like an ocean liner outracing a speedboat.
With companies increasingly opting to stay private for longer, due to a recent surge in primary fundraising, the bulk of that growth might occur before the company’s shares even reach the public markets.
Augment aggregates these opportunities on a single marketplace, making them easier for investors to study, compare, and trade.
For investors looking to build a liquid, diversified, and uniquely positioned portfolio, it might be the ideal time to take a second look at the private secondary market.
Platforms like Augment are making these highly advantageous transactions increasingly accessible. But private market investing has yet to go fully mainstream.
For investors looking to build a liquid, diversified, and uniquely positioned portfolio, it might be the ideal time to take a second look at the private secondary market.
Platforms like Augment are making these highly advantageous transactions increasingly accessible. But private market investing has yet to go fully mainstream.
Important Disclosures: Investing in private securities involves substantial risk, including the potential loss of principal. Private securities are typically illiquid, have limited pricing transparency, and often require longer holding periods. These investments are available exclusively to qualified accredited investors and offer no guarantee of returns. Additionally, past performance of private securities does not indicate or predict future results.
FOR ACCREDITED INVESTORS ONLY: Under federal securities laws, private market investments on this platform are available exclusively to Accredited Investors. Verification of status required before investing. Private investments involve significant risks including illiquidity, potential loss of principal, and limited disclosure requirements. "Augment" refers to Augment Markets, Inc. and its affiliates. Augment Markets, Inc. is a technology company offering software and data services. Investment advisory services are offered through Augment Advisors, LLC, an SEC-registered investment adviser. Brokerage services are offered through Augment Capital, LLC, an affiliated broker-dealer and member FINRA/SIPC. Registration with the SEC does not imply a certain level of skill or training. Neither Augment Advisors, LLC nor Augment Capital, LLC provide legal or tax advice; consult your attorney or tax professional regarding your specific situation. For additional information, please refer to Augment Advisors, LLC’s Form ADV Part 2A (Firm Brochure) and FINRA BrokerCheck.
