Secondary Buyout

Definition

A private equity transaction in which one PE fund sells a portfolio company to another PE fund, rather than to a strategic buyer or through an IPO. Secondary buyouts have become the most common PE exit route, accounting for over 50% of European PE exits in recent years. Critics argue that secondary buyouts merely transfer assets between financial sponsors without creating fundamental value, while proponents note that different fund strategies (e.g., growth equity to buyout, or small-cap to mid-cap) can unlock additional value at each stage.