Deal complexity dominates 2015 expectations

As secondaries deal prices become more volatile, deal complexity will increase, according to Sean Hill, a partner in Proskauer’s Boston office.  

Investors trying to sidestep aggressive pricing will continue to invest in non-traditional interests, he added.

Ted Craig, a partner at alternative asset law firm MJ Hudson agrees, adding these non-traditional interests could include co-investment fund stakes.

The biggest challenge MJ Hudson faced with clients last year was the increased execution risk that comes with more complex transactions. This can often lead to the incompletion of some deals.

Still, Craig doesn’t expect that to stop secondaries GPs from focusing on non-traditional direct and structured solutions. 

New York-based law firm Debevoise & Plimpton also thinks investors will look for more alternative and creative ways to invest.

“Next year, we expect the growth in the market to continue. The same things that drove it in 2014 will continue to endure in 2015, such as regulatory change, a desire to actively balance portfolios and funds coming to the end of their life cycle,” said partner Katherine Ashton. “That last driver is perhaps particularly pertinent; we’d expect GPs to continue hunting for liquidity solutions for their LPs.”