Gustavo Resendiz Featured in Q&A on Secondary Market Momentum – 'Investors want liquidity'

Foley & Lardner LLP partner Gustavo Resendiz is featured in the Crunchbase News Q&A, “Why Secondary Funds Still Can’t Keep Up With Investor Demand,” lending insight into the accelerating investor momentum towards secondary transactions.

Rezendiz shared that it is no surprise that general and limited partners are turning to secondaries as “a creative lifeline to unlock liquidity and reset fund timelines,” especially given the still relatively tepid IPO and M&A markets.

Asked what specifically is driving this trend, he pointed to increased demand for liquidity. “Liquidity needs are driving this demand in the secondary markets,” he explained. “Some investors need cash. Some want to move dollars to other investments or reweigh their portfolios. They are willing to sell certain private investments at discounts for that liquidity that, in many instances, has been otherwise delayed or stalled by the current M&A and IPO climates.”

Resendiz gave background on the way secondary deals are typically structured, including the key legal and regulatory factors sellers of private company interests need to consider, as well as important market context on how secondaries are giving fund managers a viable escape hatch.

“Investors want liquidity,” Resendiz emphasized. “The pricing for those underlying portfolio company secondary transactions vary greatly, and are largely driven by the company fundamentals and upside trajectory. At the same time, other managers are becoming buyers in these moments, seeking to capitalize on discounted prices opportunities. Secondary funds can’t keep up with investor demand and investment opportunities these days.”