Secondaries Career Outlook: Comp, Exits & Long-Term Upside?
I recently received an offer from a secondaries platform and am trying to get a better sense of the long-term career path before making a decision. Most of the information online focuses on analyst/associate compensation, but I'm more interested in what the career looks like over 10-20+ years at firms like Ardian, HarbourVest, Lexington, Coller, AlpInvest, Pantheon, StepStone, and GCM Grosvenor,
For those with experience in the space, what does compensation progression look like from Associate through Partner, particularly in a Tier 1 city (NYC, London, SF)? How does senior-level compensation compare with direct PE, hedge funds, banking, consulting, and other allocator roles once carry becomes meaningful? I'm also curious how secondaries is viewed today, what the long-term outlook looks like, and whether spending 5-10 years in the industry limits future opportunities. Are exits to traditional PE, private credit, hedge funds, family offices, etc. still realistic, or do most people end up staying in secondaries?
Bump
The tailwinds for the asset class are strong, but no one can tell you what a 10-20 year career will look like in secondaries. The industry isn’t even that old. You will do just fine on compensation; carry is more front loaded and lower volatility. You will not have a giant wealth creation outcome in exchange for this lower volatility. Secondaries can be a fascinating investment strategy but it does not prepare you for a control oriented seat, nor does it provide you with obvious corporate finance skills for a corp dev or similar role. Of course you can switch at the junior levels, but at some point you have to commit to it and let the chips fall. Most people I find that have been in the industry for some time are happy; those that don’t like the seat tend to leave quickly. Hope this helps
Thanks for the response, this is really helpful. One thing I'm still trying to gauge is the magnitude of the tradeoff at the senior levels. Relative to traditional PE or other investing seats in a Tier 1 city, how much of a compensation haircut do secondaries professionals typically take once you get to MD/Partner and carry becomes meaningful? Is it fairly comparable but somewhat in the lower quartile or does the gap become substantial over time?
Conceptually, you should compare the two based on a high level understanding of the major drivers of comp. If we fiat that base is roughly similar at senior levels primary vs. secondary buyside, then it's down to performance based comp, i.e. carry.
Primaries you might get 2 & 20 on a fund that most of the time will deliver let's call it a ~2.0x normalized for the inverse correlation between fund size and terminal MOIC/IRR.
Secondaries you will get 1 & 10 on a fund that almost all of the time will fall in a pretty narrow band between a 1.6-1.8x.
This is a key point to understand. On WSO the kids love to circle jerk about how real men always do primaries, but the bravado fades when you realize you've invested your career in developing political capital and relationships at some shit fund where the final asset in the vintage you have carry allocation in is going to distribute the final cash flow 20 years after it was invested and the returns are below hurdle and the franchise you're fighting to get partner at is having fundraising problems because your HVAC rollup alpha pitch is bullshit. Go look at box and whisker plots of TVPI dispersion by PE asset class. Almost every one has outliers that will be sub-hurdle, or even sub-cost - secondaries almost never, ever produces a sub-cost fund, and even showing weak relative returns can be a death sentence for a manager, so they do a pretty good job of limiting standard deviation of returns.
My $0.02 is that primaries are still better if you are truly joining a top-tier new fund spinout that is on vintage I or II and you can get carry allocation in funds I - III where the returns will be juicy and the carry will mean something. If you're just another replaceable cog in an industry full of undifferentiated playbooks, you're buying levered private markets beta anyway, so why not do it in the considerably less risky format of secondaries. Once you spend some time poking around on preqin you will see how common it is for some fund to get lucky a few times, convince themselves and others it's all alpha, and then quickly stumble hard when they get hyped up and 2x their fund size each vintage without being able to maintain discipline on deployment.
That is before you factor in that I think more innovation is happening in secondaries than in primaries nowadays, which is a more nebulous variable to assess but imho is indicative of the space's future potential to mint real wealth for its practitioners, since real innovators in this space have work to do and their creativity is much less commoditized than drones who can crank out IC presentations.
The gap is substantial, secondaries are an expensive FoF product.
It depends on the shop. The secondaries groups affiliated with consultants have low margins and probably pay poorly. Those embedded in bigger asset managers (Carlyle, Blackstone etc) the delta isn’t too bad. I don’t have a lot of data points but high level I would say 30-40% lower face value carry? Risk adjusted much better, secondaries funds don’t fall out of carry. I have no idea on bonuses
If you're comfortable sharing, do you have any rough VP/Principal/MD compensation datapoints?
The asset class has “tailwinds” but that does not guarantee career longevity and progression through the ranks. Very labour-intensive asset class with wide base at the bottom of the pyramid and fewer Partner-level seats available due to smaller pool of economics. Difficult for individuals to prove value-add because this is not a control strategy. Relationships are mattering less as more transactions are being intermediated by brokers and capital is becoming commoditised; often the easiest way to win a process is to either have the biggest fund or pay the highest price. It helps to get deals done if you have a big pool of retail capital with lower IRR hurdle but wouldn’t call this a “competitive advantage”. Ultimately, lots of people will transition out of investing into advisory or IR for higher cash comp and better career runway.
Also - the returns of LP portfolios only look good because the asset class is new. You get an IRR boost from NAV uplift and early cash payouts, but the underlying funds are mostly mature with poor outlook for long-term appreciation. Things are going to look very different in 10y when these portfolios will be sitting on zombie funds compounding at 0% and overall DPI still below 1x.
Eh - substantively, these same considerations exist to an even more risky extent for primary investors, with the exception of the NAV uplift point. If in 10y everyone is sitting on a zombie asset, that means there's a heck of a lot more primary investment professionals sitting on that same NAV without any diversification to protect their carry.
The asset class is new? Huh? LP secondaries has been around for 25+ years
Top firms pay very well. Others don’t. Wide spread.
How would you think about job stability at secondaries shops? Is it up or out or you can sorta stay as a junior
Most have been long term career seats (assuming you’re half decent) given the growth of the industry. Would be pretty easy to suss-out based on the team and looking at who has stayed.
Been in secondaries for almost a decade after doing associate years in control equity roles— cash comp is lower but carry is way higher at lower levels and tends to be more cash flowing faster due to secondary investment holds being lower.
Exits are tough outside of secondaries I would say unless you make the move pretty junior or had a robust career outside of secondaries prior. If you really wanna leave secondaries, things like moves to GP stakes, to LPs or to fundraising /product specialist roles are common
Are you happy you made the move? Would you recommend someone moving at the mid-level from PE to secondaries in the current market? Imagine the space is more competitive now and in the future so the tailwinds may be weaker but Im removed from that market
Overall, yes. It’s been a bit better work/life balance, I find it to be a much more collaborative market amongst peers and it’s been great to get a broader sense for the whole market vs hyper focusing on a few sub sectors / niches. I also like the financial engineering and structural creativity I’ve found a lot more of in secondaries vs what I see peers of mine in control shops do / what I see my other GP counterparts do. The market constantly evolves and keeps things interesting. Deal execution pacing can be quite fast, where in a real busy year I’m closing 7-10 deals a year myself and a bad year may be 3 (vs. more traditional PE you can be lucky if you get one in a year). The one minor downside has been I actually liked being more involved in asset management and plugged in with my portcos, but I think the pros have outweighed this and on balance it’s been the right move for me.
Justop can I dm you and pick your brain for a secondaries interview coming up? Coming from a family office without any direct pe/ secondary experience and don’t want to sounds like a noob
Would you recommend starting your career in IBD or if you had the opportunity would you go straight to secondaries. Is there something you would recommend for someone early in their career?
IBD gives you a ton of optimally, there really is no clear place to go from secondaries and there’s little upwards mobility because it’s already really crowded at the top
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