Buyers are hopeful that market conditions will give them greater power to dictate the terms of GP-led deals without discouraging sponsors from coming to market.
Funds set up to allow sponsors to hold assets for longer typically must satisfy both an IRR and MOIC hurdle, research from law firm Paul Hastings has found.
Sponsors must ensure their own interests align with those of their existing LPs and the buyers to combat a rise in 'conflict washing', panellists at last week's Invest Europe forum warned.
While GP-led clauses in fund agreements are not a silver bullet, certain LPA provisions could help GPs and LPs better navigate these transactions should they arise.
While secondaries activity shows no signs of slowing, LPs and GPs need to get on the same page about how to smooth out this process for institutional investors going forward.