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The Private Equity Secondaries Market During the Financial Crisis and the "Valuation Gap"

Author

Listed:
  • Ulrich Hege

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Alessandro Nuti

Abstract

The article describes the performance of the U.S. financial secondaries market during the 2008-09 financial crisis that led to its near-collapse in 2009. The market recovered quickly and showed no discernable lag, relative to that of the U.S. stock markets. It identifies the widening valuation gap as key metric of market illiquidity and analyzes the market behavior during the crisis through behavioral and accounting-based explanations. The article concludes that the resiliency of the secondaries market was proven during the crisis.

Suggested Citation

  • Ulrich Hege & Alessandro Nuti, 2011. "The Private Equity Secondaries Market During the Financial Crisis and the "Valuation Gap"," Post-Print hal-00609495, HAL.
    • Handle: RePEc:hal:journl:hal-00609495
    DOI: 10.3905/jpe.2011.14.3.042
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    References listed on IDEAS

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    1. George A. Akerlof, 2009. "How Human Psychology Drives the Economy and Why It Matters," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(5), pages 1175-1175.
    2. Josh Lerner & Antoinette Schoar & Jialan Wang, 2008. "Secrets of the Academy: The Drivers of University Endowment Success," Journal of Economic Perspectives, American Economic Association, vol. 22(3), pages 207-222, Summer.
    3. Francis A. Longstaff, 2004. "The Flight-to-Liquidity Premium in U.S. Treasury Bond Prices," The Journal of Business, University of Chicago Press, vol. 77(3), pages 511-526, July.
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    Cited by:

    1. Uppal, Raman & Vilkov, Grigory & Buss, Adrian, 2015. "Where Experience Matters: Asset Allocation and Asset Pricing with Opaque and Illiquid Assets," CEPR Discussion Papers 10437, C.E.P.R. Discussion Papers.
    2. Nicolas P. B. Bollen & Berk A. Sensoy, 2022. "How much for a haircut? Illiquidity, secondary markets, and the value of private equity," Financial Management, Financial Management Association International, vol. 51(2), pages 501-538, June.

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    More about this item

    Keywords

    secondary markets; financial crisis; stock exchanges; liquidity (Economics);
    All these keywords.

    JEL classification:

    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G01 - Financial Economics - - General - - - Financial Crises

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