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The Private Equity Secondaries Market During the Financial Crisis and the “Valuation Gap”

Ulrich Hege () and Alessandro Nuti

MPRA Paper from University Library of Munich, Germany

Abstract: This descriptive paper analyzes the performance of the private equity secondaries market during the financial crisis 2008-2009, in order to understand the effective liquidity of private equity investments during this episode of market stress. We document that the secondaries market followed the development of the crisis very closely, with effective market liquidity contracting in early 2009 to only a fraction of the volume earlier, and a quick recovery afterwards that showed no signs of more protracted turbulences than the stock market. We argue that the particular form of illiquidity in the secondaries market can be best understood as the cumulative effect of behavioral and accounting-based elements. The available evidence indicates that the liquidity and the relative resilience of the secondaries market are efficient.

Keywords: secondaries; buyouts; financial crisis; illiquid asset class (search for similar items in EconPapers)
JEL-codes: G24 G01 (search for similar items in EconPapers)
Date: 2011-04
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Published in The Journal of Private Equity 3.14(2011): pp. 42-54

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https://mpra.ub.uni-muenchen.de/39550/1/MPRA_paper_39550.pdf original version (application/pdf)

Related works:
Working Paper: The Private Equity Secondaries Market During the Financial Crisis and the "Valuation Gap" (2011)
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