Secondaries Fund Case Prep

Based on the most helpful WSO content, here’s what you need to know for secondaries fund case prep:

Case Structure and Flow

1. Initial Screening: You'll likely be given a dataset or scenario involving a portfolio of LP stakes or a single-asset secondary deal. The goal is to assess whether the opportunity passes an initial "smell test."

   • Expect to analyze fund-level structures, historical performance, and potential risks.
   • Be prepared to quickly identify red flags or opportunities based on limited data.

2. Valuation and Pricing:

   • You'll need to calculate the Net Asset Value (NAV) and apply discounts or premiums based on market conditions, fund quality, and liquidity.
   • Understanding how to benchmark against comparable funds or assets is critical.

3. Scenario Analysis:

   • You may be asked to model different exit scenarios, including timing and IRR/MOIC outcomes.
   • Sensitivity analysis is often a key focus, especially around assumptions like growth rates, exit multiples, or capital calls.

4. Presentation:

   • Summarize your findings in a clear and concise manner, often in a slide deck format.
   • Highlight key risks, opportunities, and your recommendation (buy, pass, or negotiate terms).

Technical Focus

1. Back-of-the-Envelope Math:

   • Secondaries modeling often requires quick calculations to assess deal viability. Be comfortable with rough IRR/MOIC estimates and quick NAV adjustments.

2. Fund-Level Analysis:

   • Understand fund structures, including unfunded commitments, capital call schedules, and distribution waterfalls.
   • Be ready to analyze a portfolio of fund stakes, which may include multiple vintages and strategies.

3. Market Dynamics:

   • Familiarize yourself with GP-led transactions (e.g., continuation funds, tenders) and LP-led deals.
   • Know how to assess discounts, liquidity, and the impact of macroeconomic factors on secondary pricing.

4. Diligence and Benchmarking:

   • Be prepared to evaluate fund performance metrics like DPI, TVPI, and IRR.
   • Benchmark against similar funds or transactions to justify your assumptions.

Additional Prep Resources

• Practice Materials:

  • Look for case studies or white papers on single-asset secondaries and continuation funds (e.g., BC Partners or Hellman & Friedman transactions).
  • Review resources like "An Introduction to Private Equity Secondaries" (CAIS) or "Navigating Secondaries" (Landmark Capital).

• Key Skills:

  • Brush up on financial modeling basics, especially around fund-level cash flows and sensitivity analysis.
  • Practice creating concise, professional presentations summarizing your analysis.

Good luck with your prep! Secondaries cases are all about balancing speed, accuracy, and strategic thinking.

Sources: Q&A: PE Secondaries Principal, Learning recs for secondaries, Q&A: PE Secondaries Principal