Introduction
A manager whose flagship fund is in its eleventh year, holding two companies it wants to keep while its LPs ask for cash, has one problem and at least four ways to address it: a continuation vehicle, a tender offer, a NAV-based facility, or an LP portfolio sale. Those tools sit in different business lines of private capital advisory (secondaries, primary fundraising, GP stakes, and fund finance), and the choice among them decides who receives liquidity, who bears the cost, and whether the manager's next fundraise gets easier or harder.
The Institutional Limited Partners Association (ILPA) makes the same point in its July 2024 guidance on NAV facilities, which calls them an alternative to dividend recaps, asset sales, and continuation funds and recommends that GPs disclose the alternatives they considered. The four lines are best read as one toolkit serving the same clients.
Start With Whose Problem It Is
The first diagnostic question is not which product fits but which layer the problem sits in. A private equity firm is three economic parties at once: the limited partners who own interests in the fund, the fund itself, which owns the portfolio and can borrow against it, and the management company, which earns the fees and carry. A need at one layer can often be met at another, and every solution moves cost and benefit between them.
| Client problem | Where it sits | Tools usually weighed | Lines involved |
|---|---|---|---|
| One LP is overallocated or wants to exit a manager | LP | Sale of fund interests, LP-level financing | LP-led secondaries |
| A fund near the end of its term holds assets the GP wants to keep | Fund | Continuation vehicle, strip sale, extension, NAV facility | GP-led secondaries, fund finance |
| Many LPs want distributions before the next fundraise | Fund and its LPs | Tender offer, continuation vehicle, NAV-funded distribution | GP-led secondaries, fund finance |
| Portfolio companies need follow-on capital late in the fund | Fund | NAV loan, preferred equity, CV with fresh capital | Fund finance, GP-led secondaries |
| The manager needs its next fund | Manager | Primary fundraise, sometimes with a staple | Primaries, secondaries |
| Founders want liquidity or a succession path | Management company | Minority GP stake, GP-level debt | GP stakes |
Why the Same Need Has More Than One Answer
The rows overlap by design. Take the fund whose LPs want cash. A tender offer gives liquidity only to the LPs who ask for it, at a price set through a buyer process. A NAV-funded distribution pays every LP pro rata, whether or not they wanted cash, and the interest and repayment fall on the whole fund. ILPA names this trade-off directly: where individual LPs are pushing for a distribution, LP-led options such as secondary sales may be more cost-effective than fund-level borrowing.
An interviewer who asks what a GP with an ageing fund should do is testing for these trade-offs: recommending a continuation vehicle without asking which LPs want cash, or a NAV loan without asking who pays the interest, misses the point.
How the Four Lines Feed Each Other
Secondaries and Primaries: DPI, Re-Ups, and the Staple
LPs fund new commitments partly from distributions on old ones, so a manager with weak DPI starts its next fundraise at a disadvantage. In Dechert's 2026 Global Private Equity Outlook survey, published in December 2025, 46% of respondents said they were using GP-led secondaries or continuation vehicles to deliver distributions to existing LPs, and 37% cited securing commitments to a successor fund as a driver, up from 24% a year earlier.
- Stapled Secondary
A transaction in which a secondary buyer's purchase of existing fund interests, whether through an LP sale, a tender offer, or a GP-led deal, is linked to that buyer's commitment to the manager's next primary fund. Selling LPs receive liquidity and the manager secures new capital, but the combined terms can affect the price the sellers receive.
The staple works because the same institutions sit on both sides of the business: HarbourVest, for example, commits to new funds as a primary investor and buys fund interests on the secondary market. The conflict is just as structural, because the price the sellers receive can be traded off against the terms of the buyer's new commitment, which is why the pricing and disclosure of stapled deals gets its own article. The link also runs the other way: a placement relationship is a head start on a GP-led, because the team that raised a manager's last two funds already knows which of its LPs are likely to sell or roll.
GP Stakes and the Growing GP Commitment
The manager-level line connects to the fund-level lines through the capital the manager puts into its own funds. Managers sell GP stakes for founder liquidity, growth capital, and succession planning, and also to strengthen the balance sheet that funds their GP commitments.
- GP Commitment
The capital a fund's general partner and its principals invest in their own fund alongside the limited partners, intended to align the manager with its investors. Because it scales with fund size, a manager raising successively larger funds, or reinvesting in a continuation vehicle, needs more of it.
Continuation vehicles add to that need, because lead buyers usually expect the GP to roll a meaningful share of any crystallized carry and invest fresh capital. A minority GP stake is the equity answer, explained in how a GP stake sale works; GP-level debt and preferred equity are the financing answers.
Fund Finance: The Alternative on Every Table
A subscription line, secured on the LPs' uncalled commitments, is routine early in a fund's life and rarely competes with a secondary. A NAV facility, secured on the portfolio, is the product that competes with the secondaries lines later on, and ILPA's list of what it can replace runs from continuation funds to single-company dividend recaps, the route explained in the dividend recapitalization explainer. Borrowing keeps every asset and every LP in place but adds a repayment obligation; a continuation vehicle or a sale changes ownership and settles the question. The product is explained in this primer on NAV loans in private equity.
Different Economics and Different Clocks
The lines also earn money on different bases and at different speeds.
| Line | Who bears the fee | What the fee is tied to | Cadence |
|---|---|---|---|
| LP-led secondaries | The selling LP | Completing the sale | One-off auction with a closing date |
| GP-led secondaries | Engaged by the GP; allocation negotiated per deal | Closing the transaction | One-off process ending in LP elections |
| Primary fundraising | Usually the fund, offset against the management fee | Capital raised | Campaign repeated every fund cycle |
| GP stakes | The manager's owners | Completing the stake sale | Rare, strategic event for the firm |
| Fund finance advisory | The fund or the GP | Arranging the facility | One-off, sometimes refinanced |
The placement row shows why payer and economic bearer can differ: when the fund pays the agent and the fee is offset in full against the management fee, the manager bears the cost. Cadence differs too: a secondary sale is a discrete auction, while a fundraise is a campaign, and PitchBook found that US private equity funds closing in 2025 had spent a median of about 12 months raising, down from nearly 17 in 2024. Secondaries generate success fees that are lumpy by nature, while placement produces a recurring relationship that returns every fund cycle. Who actually bears each of these fees is traced in How PCA Firms Make Money.
Where Lending Capability Changes the Advice
Firms differ most on fund finance, the one line where capital can come from the advisor's own balance sheet. An advisory-only firm arranges capital from third parties: Campbell Lutyens, for example, advises managers on GP-level debt, preferred equity, and structured financing, while the money comes from banks, NAV lenders, and preferred equity funds. A universal bank can do more: JPMorgan's fund banking business offers subscription lines and management company term loans, so one institution can diagnose a liquidity problem and fund part of the answer.
The trade-off resembles the split between balance-sheet banks and pure-advisory boutiques in debt capital markets: the lender offers certainty and speed, the independent adviser a view across every lender's terms and no stake in which product wins.
The toolkit view comes down to a diagnostic habit: locate the problem at the LP, fund, or manager layer, know which neighbouring line offers a competing answer, and be candid about which answer the firm gets paid for. Comparing the chosen tools on who receives cash, who owes the money, and whose claim ranks first is the next step, covered in Liquidity Options for Managers, Funds, and LPs Compared.
