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


  • Hege, Ulrich
  • Nuti, Alessandro


This descriptive paper analyzes the performance of the private equity secondaries market during the financial crisis 2008-2009, in order to understand the effective liquidity of private equity investments during this episode of market stress. We document that the secondaries market followed the development of the crisis very closely, with effective market liquidity contracting in early 2009 to only a fraction of the volume earlier, and a quick recovery afterwards that showed no signs of more protracted turbulences than the stock market. We argue that the particular form of illiquidity in the secondaries market can be best understood as the cumulative effect of behavioral and accounting-based elements. The available evidence indicates that the liquidity and the relative resilience of the secondaries market are efficient.

Suggested Citation

  • Hege, Ulrich & Nuti, Alessandro, 2011. "The Private Equity Secondaries Market During the Financial Crisis and the “Valuation Gap”," MPRA Paper 39550, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:39550

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    References listed on IDEAS

    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. Buss, Adrian & Uppal, Raman & Vilkov, Grigory, 2015. "Where Experience Matters: Asset Allocation and Asset Pricing with Opaque and Illiquid Assets," CEPR Discussion Papers 10437, C.E.P.R. Discussion Papers.

    More about this item


    secondaries; buyouts; financial crisis; illiquid asset class;

    JEL classification:

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


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