Slower exits push investors toward a structure they once used as a last resort
Institutional investors sitting on mature private markets portfolios that have not returned capital as expected are increasingly turning to a structure once treated as a last-resort exit, according to a new Mercer report published in June 2026.
That report, Private markets in motion: secondary investment strategies, finds that GP-led secondaries have shifted from a niche liquidity solution to a core portfolio management tool.
Mercer attributes the change to two forces: cyclical pressure from slower exits, constrained distributions and valuation uncertainty, and a deeper structural shift in how GPs and LPs manage mature portfolios.
Mercer's central message for investors is that a single number cannot carry the assessment.
Outcomes depend on a holistic valuation rather than on the headline discount to reference date NAV alone, the report argues, because entry price, valuation methodology, growth profiles, margins, free cash flows, fees, carry, leverage, GP rollover, governance and exit route all interact.
Alignment remains the credibility test, according to the firm.
Mercer's data show average GP commitment ranging from 6 percent to 10 percent between 2021 and 2025.
The report says the case for a deal strengthens where cross-fund commitment, full rollover of active equity, transparent treatment of GP economics and more than 50 percent rollover in portfolio company management back that commitment.
Mercer also urges investors to weigh these deals at the portfolio level, not just the asset level.
Continuation vehicles can add high-quality, shorter-duration or high-conviction assets, the report says, but investors must test them for liquidity, asset concentration and diversification across managers, vintages, sectors, stages and revenue drivers.
On pricing, the firm argues discipline remains achievable even in trophy assets.
Its analysis suggests access to high-quality assets does not automatically require premium pricing, and Mercer records an average settlement discount of 7.9 percent across its GP-led portfolio.
Deal terms are also converging, the report finds.
Across Mercer's POE GP-led sample, the average management fee was 0.85 percent, 86 percent of carry structures were tiered and 69 percent of transactions carried a 20 percent maximum carry.
Flat carry is fading, appearing in just 3 of 26 deals in 2023, 1 of 17 in 2024 and 1 of 14 in 2025.
Mercer cautions that its figures reflect only deals that passed its own sourcing, due diligence and negotiation, so they show the firm's selectivity rather than the market at large.
The firm draws its conclusions from 148 private equity and real assets secondary transactions completed between 2021 and 2025, including 117 GP-led continuation vehicle transactions.
