The GP-led secondary, in which a manager moves an asset from one of its funds into a new vehicle it also controls, has become one of the most common and most scrutinised transactions in private markets. For a limited partner, each one is a decision that deserves real interrogation rather than a rubber stamp.
The structure can serve investors well, giving those who want liquidity a way out while letting the manager hold a prized asset longer. It can also serve the manager first, setting the price at which it effectively sells to itself. The limited partner's task is to tell which is which.
The questions that matter
A sound GP-led deal is priced against genuine third-party interest, offered on terms a sceptical outsider would accept, and backed by transparent disclosure of the economics the manager earns. The limited partner should demand to see the competing bids and the basis for the valuation.
Where no outside buyer will pay the asking price, that itself is information. The limited partner who interrogates every GP-led deal on these terms protects itself; the one who waves them through trusts a party that sits on both sides of the table.