Inside the GP-Led Market: Industry-Leading Kirkland & Ellis's Mark Boyagi on Continuation Vehicles, Evergreen Structures, and the Diversification of Secondaries

Speaker 1 Today on Secondary Snapshot, we are stepping into the kitchen of the secondary world, taking a look at the market from the viewpoint of Kirkland and Ellis, the law firm with the largest presence in the secondary industry for continuation vehicles. Last year, Kirkland closed 58 GP LED transactions totalling $63.7 billion, which is approximately 60% of GP LED volume globally. Mark Boyagi is a partner in the Investment Funds Practice Group in the New York office of Kirkland. He focuses on advising sponsors and lead investors in connection with complex business transactions in the private fund secondary market, including continuation fund transactions. By almost many measure, Mark is one of the most prolific secondary advisors in the world, having advised in more than $29 billion of total continuation fund transaction volume in 2025 alone. Beyond the scale of his practice, Mark is also at the forefront of innovation in the secondary space, including the rapid expansion of the market into credit infrastructure, energy, GP stakes and other strategies, as well as the use of secondary structures to see permanent capital vehicles. We go into much of this in our chat. Thanks for tuning in. I hope you enjoy the conversation. I'm Mike Bigo, Managing Partner at Clientele Partners and this is secondary Snapshot. Speaker 2 How's your year been so far by the way? Speaker 1 You've been great. It's been busy, not Q 425 levels of busy, which was honestly that was just something else from a deal volume standpoint, but busy in the sense that there's a lot of, there's a lot of runoff stuff, frankly from 25 that we're pushing through to both signings and Closings, a lot of stuff that's been launching it pretty materially up, frankly, relative to Q1 in 25. Just from a deal volume standpoint, that's not really saying that much because I think Q 125 is pretty soft. I also think that macro conditions being what they are, things are a little softer than maybe we expected from being completely frank. And what I mean by that is that a lot of the stuff that we expected to just launch and go in Q1, like in terms of new deals, like 26 deals, they've been deferred a little bit. I think the view there is frankly, let's see what happens more broadly with the, the SAS apocalypse and and the sort of the broader macro environment that we find ourselves in really busy, but also frankly a promise of getting even busier assuming sort of macro conditions normalize a little bit. Speaker 2 You know, everybody listening to this wants you to be working like nights and weekends because that's like a whole liquidity or like the industry lags. Speaker 1 It's funny right? Like you think of secondaries as this both pro and counter cyclical phenomenon, but it takes time for stuff to make its way through the market and actually have an impact on volume. And so you're not instantly a hedge against choppy or a down market just because the tool is out there. It takes time for that to socialize with the deal professionals as who actually want to do the deals, who actually want to bring the deals to market for the buy side, who actually want to deploy into those deals. So I think within that moment right now where there's a little bit of wait and see, frankly, volume is good. It's just not quite as astronomical as I think everybody expected coming off the record year that was last year. Speaker 2 I think it's bad was like like going into 2024, going into 25 every year, everyone's, we just want it so bad. Yeah, liquidity year, all that exists and it's always been something that's six months away at six months away. Speaker 1 It, but we still keep having record year like yes, more or less anyway record year after record year, at least as far as the GP LED market is concerned, which is more where I play than the LP LED space. That area is both growing from a volume standpoint from our vantage point, but also it's diversifying in a really exciting way. Obviously, everyone knows about the credit CV phenomenon. The fact that it grew threefold last year relative to the previous year, certainly a lot more of that going on notwithstanding sort of some of the private credit headwinds that I think the broader market is experiencing. That's not to say that it's not creating some challenges around those types of deals, but there is still a significant amount of appetite and obviously a significant amount of capital around those deals. But more broadly, there's a real diversification, frankly in the secondary space, which is really exciting. Like the advent of credit is just one piece. You've got infrastructure where there's been a significant amount of capital raised getting deployed into assets that are frankly traditional infrastructure, toll roads, airports, whatnot, but also the new age infrastructure, the data centers and all that stuff. So it's really exciting in the sense that the secondaries market is just like a bit of a microcosm of the broader private markets. And in the same way that the private markets proliferated along strategy that's happening in secondaries as well. And then you add to that the, the fact that you've got this sort of exciting growth in in Evergreen capital and how that's intersecting with the secondary markets, both in terms of providing additional investable capital, but also frankly, the use of Evergreen technology alongside the traditional closed ended CVS, the 5 + 1 CVS that we've been seeing. It's really leading to an expansion of the discipline beyond what we've known and really gotten used to in the last 5-6 years. So it's a pretty exciting time to be sitting in this seat. As you can probably tell, I'm pretty jazzed by all of the new developments in the space. I think it keeps things fresh and keeps things fun. Speaker 2 Every few years it seems like some big trends come along. There were GP lads, there were the the lending lines, the lending funds like Dawson and 17 came along totally expanding. And the credit for Jebolis, that's been great. And still the percent turnover of total assets is still minuscule. It's like a couple percent. Speaker 1 Total. That's it's one of the reasons why you keep hearing these lofty projections of trillion by trillion of volume by 2030, which I mean, honestly, we're in 2026. I think that's a pretty punchy projection, but I think we can certainly get to 500 by then. I think there's a path there. Depends how you count as well. What do you actually put in the secondary's bucket? The counting GP stakes and control deals at that level and God knows what else. So it depends. Speaker 2 Yeah. And I think there's some big parts that aren't counted that maybe should be today. So for example, in the 226 billion, I don't think that includes for example the robust market around secondary directs for companies like Stripe or space outs are having. Speaker 1 No. Speaker 2 Which is a lot of stupid down, but 60 or 100 billion, I'm not sure exactly where that is, but that's a lot more and that's private secondary. It feels like these. Speaker 1 Big sort of growth tech Unicorn companies are running these company tenders all the time and the really interesting development honestly in that space is that actually creates embedded liquidity. If you're thinking about a VC firm or a growth firms exposure to those underlying assets. As my earlier point, the intersection with Evergreen technology and the, the continuation fund space, you're actually beginning to see situations where you can create what is effectively an Evergreen CV that has the ability to provide liquidity through these, you know, semi annual tenders that are being run by these large businesses. And you can actually price them because you have this sort of third party validated semi annual pricing mechanic built in. These guys are going off and selling their their management stock on a semi annual basis at scale. And that was always the challenge. Like how do you cut NAV in a way that makes any kind of sense? It makes sense because it's third party ballot. It's third party price validated now. Speaker 2 Yeah. Like I generally wondered if that's not a better structure for some of the Evergreen bonds on Fortier and promised the 5% per year to send them price or have them be tradeable at going now or go going price. Speaker 1 It's, it's a question and honestly you, you have to ultimately map to the underlying portfolio and the broader strategy of what it is that you're pursuing. And I think honestly you look at the growth world like growth investing world and you look at these large businesses that private, but have this embedded liquidity increasingly, particularly with IPO markets being obviously, I say this somewhat ironically given I think SpaceX just announced it's, it's IPO today, maybe fail, I maybe missed it maybe that I just saw the headline and I'm extrapolating. But but either way, they obviously want to IPO and that's something that's going to happen at some point. But beyond that, you've got a lot of large mature growth positions that frankly have these that are going to be private for a long time yet and they have these semi annual tenders that are being run. It's a really unique way of being able to, if you're a fund sponsor in that space, be able to get your investors liquidity while being able to frankly continue to buy in including via retail channels. So it could be a pretty interesting. I think that's an area that's going to continue to develop and it's one that we're getting a lot of inbounds on at the moment. Speaker 2 Just to be a little bit nerdy, is there a future technology around companies within PE portfolios that's not a full CV, but there's some like liquidity approach that you can envision down the road. Right now all the companies that the 20 companies are trapped with the private equity fund. So you don't you get one or a few out at a time. Each company have its own like individual wrapper that you know they could be partially tradable for minority small number of LP's or whoever wants to at a time. Speaker 1 So I've got something along those lines now. The private IPO market, I hate that term because it's such a misnomer, right? And so I think that's a technology that is is out there. The question I think from a sponsor's perspective is do you necessarily have to sell to a third party in that scenario or could you potentially structure it as some sort of a cross trade if you really like the underlying position and you think it's good for your sort of successor fund, you don't know is the short answer. I think cross trades obviously carry their own, they carry their own conflict issues and they're obviously almost always subject to ALPAC consent. And so the question ultimately is the underlying rationale and whether you can sell that to the respective Alpacs to make it work. But in theory, I don't think there's any reason why you couldn't have via that kind of interim liquidity structure, the ability to switch out funds within a sponsors platform. Yeah. And so. Speaker 2 Before we go too far, yeah and dial it back and look also and if you were coming on the secondary snapshot, Kirkland is one of the top firms in the industry doing all these massive deals and you guys are definitely leader and Kirkland, they're one of the top guys, super appreciative. Matt Wesley, that's I suggest that you come on. And so thank you. That's been tough. Speaker 1 Very happy to be here and appreciate the suggestion by Matt and. Speaker 2 Look, would love to hear your personal story. So you dial that to when you're 15 or university or wherever, whatever is interesting or relevant to your career. You share that Mark's story. Speaker 1 So as you can probably tell by my accent, I I come from abroad. I'm an Aussie. I was born and bred in Australia, spent my formative years as a lawyer there. So I studied there. I worked at a firm called Mallison's and also another firm called Allen's for a few years and the market in Australia is developed, but it's not anywhere near as deep as the US or Europe. And so inevitably you do a smattering of things as you're coming up. So bit of a corporate lawyer as opposed to being a funds lawyer or an M and a lawyer or something like that. So I did everything from private funds to registered funds, IP, OS, regular way, M&A, IT secondary capital raisings, like it was a whole, it was a whole thing. And I actually think it positioned me incredibly well for my career because it gave me a breadth of experience that frankly you need as you look to become a secondary's lawyer first and foremost, which is which is a hybrid role highest. Speaker 2 Level of law. I'm sorry, The highest level of law I. Speaker 1 Think it's incredibly, I don't know, it's the highest, but it's. Speaker 2 Elevated first secondary snap felt. We'll go with the highest. Speaker 1 Yeah, it's the highest. Let's we the 5th. Speaker 2 Highest SO. Speaker 1 I moved here about almost 10 years ago now. I joined the firm called Devil Boys and it wasn't as well worn of a path at the time, frankly, for Aussies to come to New York. They tended to go to London and I would always, I would always joke that I ended up in New York because I got lost on my way to London. But I came and Devil Boys has a great funds practice. I had the opportunity to really dive in and specialize in the private funds world and in particular sort of fun formation specifically. What I found though was I tended towards the weird, which I find more interesting and more intellectually engaging generally. And so weird at that time was secondaries and predominantly on the buy side. Because as I think most people know, if it's on the sponsor side, there's a good bet that Kirkland's acting on that side. And if it's on the buy side, then you know it's another firm. So I was acting for Harbor Vest and others when I was at Devil Boys and it was a great experience. It was an opportunity to do things that were just not stock standard fund formation, which I continued to do and it still made-up a fair chunk of my practice. But it inevitably it became a little less interesting to me. And it's forces for courses, some people very much prefer that, but it just wasn't for me. It became less interesting to me as time went on. And naturally, when you're working on the buy side at another firm, you encounter Kirkland on the sponsor side. And we hit it off over a number of transactions and we talked for a while. Eventually it just made too much sense. If you're going to do secondaries, the cell went, you should do it at Kirkland. And so eventually that resonated. And I made the move five years ago now. And at the time, the team was pretty lean. We had about 10 people on a dedicated basis that were in the Liquidity Solutions team. And in that time, I've been lucky enough to ultimately ride the wave, the growth wave of the secondary space. And the firm has been incredible in terms of the investment that they've made. And so we've grown from 10 to platform about 75 now globally. Majority of those are in the US, but we're also based in London and in Hong Kong. And yeah, it's been a real ride. And it, as I was saying at the beginning of the, the Zoom, it was, it just continues to get better and better in the sense that you're challenged each and every day with something new and esoteric and you're forced to think outside the box. And nothing is really more gratifying as an advisor than the ability to tell your client, I've seen this before, or if I haven't seen this before, I've seen something similar. And let's, let's work on, let's build this across the table together and think about how we can ultimately deliver a solution that works for you, works for your LP's, works for everyone. So anyway, that, that's my story in a nutshell. I, I wasn't planning on necessarily staying for the rest of my career, but like any itinerant Aussie, I was looking to just go overseas for a few years and maybe go back. But much to my, my parents distress, I, I decided to stay with my wife. And I have a little lever little American daughter now who's 20 months old. And then, yeah, it's, I think this is home now and I wouldn't want to be anywhere else. Speaker 2 That's great. So you're going through the whole school process then in New York, which I understand. Speaker 1 Can be a thing if not yet. She literally had her first day of school is generous but she had her first day of I want to say supervised daycare on I think it was on Monday so we dropped her off and she seemed to be having a ball. The school thing is coming and I've heard that it is a real challenge, but I'm just looking to enjoy the novelty of of watching my kid finger paint at the moment. That's awesome. That's great. Speaker 2 And then for New York City was a draw and like the meat work that you're doing at Kirkland and. Speaker 1 Yeah, I'd been to New York and there was just this, this energy in the air, which I'm sure other people have mentioned whenever they've decided to make them move, that there's just a vibe in the city. There's so much to do. I think I just felt like I belonged in some respects. It was my speed and and it still feels that way. So far so good. Speaker 2 And it's definitely can still, even if you're going super fast-paced and you've got a ton going on and you're always out doing stuff. You know, Eric is so big. There's always, you know, experiences, new people. Speaker 1 We love the theater, right? And so my wife and I went to a show. Shout out to Fear of 13, which has, my God, I forget the name, Adrian Brody and Tessa Thompson. Fantastic show. And that's the thing, right? If you love shows, New York's where you want to be. If you love museums, it's where you want to be. It's a really cool city to live in and my my daughter's a local so I'll have to take her temperature when she can form full sentences as to how she thinks about living here and growing up here, but she seems to enjoy it so far. Speaker 2 Awesome, awesome. So if you if you think of Kirkland from perspective, my understand is you guys are the biggest, are they like doing the biggest deals? How would you, how would you explain the people who don't know Kirkland as well for the industry, I think. Speaker 1 It's useful to actually draw a distinction first and foremost between sponsor side and buy side work when you're thinking about secondaries. We certainly have a big buy side practice, but you can't always do both sides and so inevitably we tend towards the sponsor side, a reflection of the way Kirkland is set up as a firm. We have more than 1000 GP clients and the idea essentially is our team's remit is really about delivering liquidity in a way that isn't an IPO or a trade sale for our sponsor clients with respect to their assets. And obviously the environment we've been in, it's been business has been great, but it's also been a time of great creativity and and honestly a very fulfilling time to practice in this space. As far as that practice is concerned, we very much the biggest in the sponsor space. We estimate that we did more than 60% of the yeah of the GP LED deals in the US last year. And as the denominator continues to grow, we've managed to retain that level of market share, which is frankly really gratifying and also honestly just a reflection of the support we get from the firm because you can't service that level of volume without the talent to really, frankly do the deals. And the firm has been phenomenal in investing in this space and giving us the wherewithal to go out and actually build this team. We're definitely the biggest on the sponsor side, on the buy side. As I said, conflicts being what they are, we can't always act on the buy side, but. We certainly do have a pretty robust buy side practice. We inevitably, we inevitably do lead investor mandates more than sort of syndicate mandates or for example like LP trades unless they're particularly sizable. Because our view ultimately is we want to be able to bring the most value to our clients. And ultimately we think we'd bring that value in the most complex high stakes transactions. That's us in a snapshot and it's a broad practice. So obviously CVS get all the press and we do very sizable ones, but we also do very small ones and we do ones that are in the middle. We do kind of everything that you would imagine when some things that you don't around how around delivering liquidity in an alternative way. And so inevitably we intersect with all manner of practice groups within the firm, whether it's M&A, finance, structured finance, tax, etcetera. And so even though we're a lot practice in our own right, we really are a part of the broader integrated platform here at Kirkland. So it's one platform, one team, 1 dream kind of thing. Awesome. Speaker 2 And before you're talking about every day there's new things to figure out and challenges, which makes it like not boring and you can buy now some of the biggest CDs you've done. Would love to hear about some of the big things you're figuring out and the more problems are solving and how some of those are leading to the technology evolving. Speaker 1 Sure. So I think the probably the most interesting development of the last few years that I mentioned was the credit CB market and just the way that that really exploded. It's not just scale because frankly those are very chunky deals. Like we did a deal for Crescent last year that was in excess of 3 billion. We did one for benefit St. that was bigger than two. It's definitely an area of robust growth and but beyond that it's a totally different deal relative to how you would do a private equity CV, a single asset deal or a multi asset deal. You're talking about a yielding portfolio, you're talking about an underlying portfolio in some cases of 200 or 300 positions that each need to be diligent, some of which are debt, some of which are equity, some of which are somewhere in between. You're talking about re levering the portfolio. You've got all these different pieces that are ultimately coming together in what is already a complex transaction type hits being ACV and then you add this sort of additional layer of complexity just by virtue of what it is that you're transferring. I think that has been an incredibly fun development in the secondary space and I think it's growth is really exciting. Beyond that, I would say, and I already mentioned this, the development of Evergreen technologies in the CV space and the thought process that goes into using CB technology to seed Evergreen products or even using CB technology to seed multiple products. So it could be both closed ended and epigrade for example. Sorry, go ahead. I see you have a Yeah, so. Speaker 2 I was just going to say if you're about to, but just explain a little bit more how that works. So you do ACV continuation vehicle, you're pulling a company out of the portfolio and they're putting it right into a tradable every vehicle. Is that the thought? It's not. Speaker 1 Always. It's not always tradable. Sometimes they're institutional capital that are coming in and backing it and sometimes they are open-ended and sometimes they're Evergreen in the sense that they're just long dated. And I wouldn't say that's a huge segment of the market, but it's certainly one that's developing and it's developing in honestly in in areas that you maybe wouldn't have traditionally thought that would like I mentioned venture and growth before being able to structure a transaction that ultimately is marketable to two different investor bases. The institutional on the one hand and the retail on the other is another order of complexity relative to just ACV transaction where you've got a secondary community that you're frankly very familiar with and understand the puts and the takes of dealing with them. You've got this additional layer which you talk about trying to land a plane on a moving runway like this is just an additional layer of complexity. And I think for me, it's an area which frankly, we're still grappling with because it's so new, but it's also incredibly fresh and exciting because you're learning something new every day. And frankly, the moment you stop learning something in this space, you might as well just stop doing it. So I think that's another area that's really interesting. I think the natural sort of intersection of CB technology and retail capital. And particularly when you're thinking about, sorry, not CB technology secondaries and and the retail capital is actually really interesting. Like you think about getting diversified exposure to the private markets and the fact that you've got these Evergreen funds, these retail funds that are out there and voraciously looking for that exposure. It's no wonder that LP trade pricing has significantly gone up in, in the, in the recent years because you frankly have a market that's a little bit more competitive around those, those underlying positions. So I think that's super interesting as well. You've got Evergreen technology downstairs, you've got Evergreen technology upstairs, and you've got secondaries, which are these in the ground, these in the grip, this in the ground portfolio that you're getting access to, which I think is honestly just a new frontier. So there's just an additional layer of complexity beyond the how do I do ACV real good kind of thing. And I think that's what's really exciting about being at Kirkland because honestly, before this stuff makes its way out in the market, we're kicking it around with our clients and iterating and ideating and ultimately trying to create something new that we think is going to work. And it doesn't always work, but you sure as hell learn a lot in the process. Speaker 2 And so if a 40X fund or a couple 40 funds are taking a part of ACV, that changes some of the structuring. Speaker 1 That's happening a lot now anyway. Like you're getting inevitable, you're getting inevitable expansion of the number of investing entities coming into these underlying CVS, many of which are 40 X funds. And so inevitably, I'm not sure about you guys, but inevitably when a buyer is coming in, they'll allocate across their accounts, they'll go main fund, they'll go SMA's, they'll go some Co invest and they used to stop there, but now it goes 40 act fund in some cases. And obviously there are concentration issues that they need to navigate, particularly if you're talking about a single asset CV. And so the that's frankly why the 40 act funds are well suited to the diversified portfolios that you get like in an LP trade. But you certainly are seeing them coming into CVS and there are impacts. For example, it'll hit the side letter and some of the reporting for example, that the the Evergreen fund is going to need, the retail fund is going to need with respect to its own obligations. But that's relatively old hat at this point. I think personally, the more interesting part, the more interesting part is how you can deploy that type of technology one level down when you're talking about a sponsor looking to set up what is effectively in the first instance ACV, just a regular ACB, but that you could potentially turn into an Evergreen fund at a later point in time that takes in retail capital and has that be the source of liquidity potentially over time for the institutional investors. So you have a, you effectively have created the technology that makes a second CV redundant. That to me is I think a little bit more interesting, a little bit more exciting than just the the ability to go out and deploy retail capital into LP stakes or CVS because I think that's pretty common at this point. Speaker 2 Super interesting, but. Speaker 1 Yeah, I mean, it's a fun time to be a secondary's lawyer. It sounds like it's a fun time to be a secondary's professional. Anything that just turn it back on you while I'm here. Anything that I've said that sort of particularly resonates or sort of any views that you have in terms of the market in the first quarter and how it shook out for you? Speaker 2 Yeah, look at city of the, I think it's really interesting to me how you're talking about doing ACV into a vehicle and potentially yeah being accessible to retail or other trading in the future because the guy always see the secondary industry is slowly progressing towards where the public markets are. Yeah, and it's a long way to go, but if you think about it, people talking about doing this CV and CV square, CV cubed, all that. But why not once it pops out, just have it be in a more fundamentally liquid structure. Shouldn't have to be like CV square, CV cube, whatever. Just if you make it out of the gates more liquid like, why would that not be like a longer term salute? Speaker 1 I think it is to say it, a lot of this is a lot of this is at the conceptual stage. So what I mean by that is we built the flexibility to do some of that stuff. But have you seen a lot of see, have we seen a lot of CVS taken out by retail capital? No, it's something that I think is going to come in time, but there's always going to be, I think a little bit of a an issue that needs to be or it's a pretty big issue that needs to be navigated, which is I think concentration risk. It's ultimately A suitability issue and you can only have retail capital coming into CVS to a certain extent. I think there's going to be a point where diversification is still incredibly important. And so if you're talking about a really concentrated portfolio, I don't know. It seems to me that it seems to me that you may have a bit of a mismatch between your sort of end investor and the sort of underlying profile of the asset. That's at least how I think about it. I think it can happen gradually and I think it can happen incrementally, but I don't think we're at a point where there's enough appetite or frankly it's even appropriate for retail investors or frankly even permitted for retail investors to get access to that kind of concentration of asset. I think that's how I think about it at this point anyway. Speaker 2 The last week actually Paul Atkins came out to Greenwich of all places and still get the American German Council. And one of the things you talked about pending legislation was in the next few weeks, some more them providing more clarity around retail investors and potentially specifically 4 O 1K plans being able to access private equity. And you could see a world where IF4O1K plans in the trillions of dollars there. Yes, they don't want concentration in just one CV, but it's these were somewhat treatable and they could pay people into dozens. You can see a ton of potential capital and pick up the man for a ton of these types of vehicles that you're talking about to come out It's. Speaker 1 It's doable to the extent that you can get the diversification right, I think, but I just don't we're not quite there yet. It's it's like the we've just gotten past CB squared. Speaker 2 Yes, yeah. And. Speaker 1 It feels like there's a bit more to run, but I listen, I agree with you. I think capital is never going to be fungible between retail and institutional. I think in as far as the private markets are concerned, they're private for a reason. And obviously there is a movement towards continuing to liberalize access for retail investors and otherwise to get access to the private markets. But I think it's always going to be a question of balance. And I think there's always going to be a place, I would think this because it's self-serving, but I think there's always going to be a place for the institutional CV because it's just so well suited to the private equity model more generally, which I think increasingly is informed by, honestly, the drive for DPI, which is in turn being resoundingly, resoundingly requested and demanded by LP's. You can't do ACV on every single asset in your portfolio or some sort of cross trade on every asset in your portfolio. The music's going to stop if you try because the LP's will say this is not what we decided to invest in. We don't want to make a decision on every single asset as to whether or not we sell versus roll. We ultimately paying you guys to make that decision. Doesn't mean that it's obviously ACV makes a ton of sense, but it just needs to have a tight rationale and it needs to be done in a way that doesn't cannibalize or over the overly cannibalize the sort of regular way exit routes. There's a healthy balance to be struck across the board. Speaker 2 The Speaking of LP's and investors and these funds, I remember five years ago, seven years ago, LP's didn't seem to understand CVS super well and understood them, but they definitely knew they did not like them. I think the majority were very much against them. And there was, and, and I think you Fast forward to today, liquidity has been really tight in the industry. They're very happy to get capital back from the CVS we've done at Cline Hill. LP's are averaging like 3X on the companies that are coming out. So it's a great, it's a good outcome, but what are you seeing as the latest in the LP sentiments? And we talked a little before there's like SEC and Elba, yeah. What's going on with where are they today? Speaker 1 So I think the definitive view of LP's hating CVS, it's definitely not the case anymore. I think that it's a much more nuanced perspective that you tend to see. Some LP's still don't like them just as a matter of course, more LP's understanding them. But I think as my mum used to say, everything in moderation, right. And the rationale as I was saying really needs to stand up on a sort of asset and sort of fun specific basis. So I think LP's are taking a rightfully scrutinizing perspective when it comes to these transactions. They are conflicted transactions and it's easy to forget that in the context of what is a marketed process where you get a third party to come in and price. But they are conflicted transactions and I think LP's rightly scrutinize them and they try to understand why are you doing it this way? Why didn't you do something else the that answer, getting that answer right and frankly having a good answer to that question is fundamental to whether on ACV transaction is going to be successful. And so that's one piece which I think is really important, the underlying rationale and communicating that and. Speaker 2 What are acceptable? Speaker 1 Rationale for doing CV transaction, we are able to get a market driven price that will crystallize a great return for you guys. I'm speaking from the GPS perspective, drive DPI on an accelerated basis, optional liquidity, yeah, but in a way that allows you to retain your exposure on a status quo basis. And that last part is really important because anytime you say that you can retain your exposure to an LP, but it's coercive. I think LP's look at that and say that's not really a choice you're offering me. And we are a Kirkland big proponents frankly of the status quo rollover options, not in every case because in some cases it doesn't make sense. For example, it's a the last asset in a fund like doing a status quo deal in that context, if it's a forex fund like generally speaking, that doesn't make any sense. It's a clean up trade at that point. But if you're talking about a single asset trophy asset deal, status quo rollover is really much the market in the US right now, different in Europe because in Europe you have different tax regimes at play and the tax deferred rollover, which I think is fundamental to doing a staff really isn't on the table in many cases in Europe, in most cases Europe. So what I would say is that you need to be able to say to your LP's this is optional liquidity and you get a true option coming out of this. It also helps frankly to be able to say we don't have enough capital in the existing fund to continue to support the go forward value creation. It's not always the case by the way, some of these businesses are incredibly mature and they're cash flowing on their own. You don't need or they have enough debt capacity to go off and fuel growth initiatives. But to be able to say that I think just is another fact that I think is structurally important in rationalizing ACV to your LPAC. It's, it's the old narrative. It hasn't really changed in that respect. I think the thing that has changed is LP's, at least when we do these transactions and obviously clients decide what they want to do one way or the other. But we certainly advise, don't let your LP's feel like they're being coerced into one thing or another. Let them make a choice. And honestly, in most cases, they're taking liquidity. That's not to say the the more friendly rollover hasn't resulted in higher rollover rates. It has. I'd say that rollover rates are probably up between 5:00 and 10% since sort of the status quo rollover really took hold. And I think that's a byproduct of one, it's obviously a friendlier rollover, but two, you have the LP's better situated structurally to actually make a rollover decision then historically has been the case. Often you would hear, are we just going to sell because we have to, because it's too hard to go through the process of taking this decision all the way to, I don't know, the treasurer or the governor or something like that in order to make that decision. Those processes I think have been somewhat eased. And so as a result, it's not a structurally difficult for an LP to roll. And I think rollover is healthy for the market. I don't think it's a bad thing. It's going to allow us to do bigger deals than have historically been the case, and that's just going to be good for everyone. You're going to get access as a buyer to the type of deal where previously we've had the conversation with sponsors. You'd hear, oh, it's too big for ACV, you can't do it. You can't do a $7 billion CV, that's too big. Maybe with a sufficient amount of rollover you can't, particularly as the buy side continues to capitalize and build out. Speaker 2 Yeah. I think on the rollover side, what person do you think status quo because I know that is a huge deal and I believe they don't like that fees reset. They don't like they don't have the fees except they don't like having to have a new commitment. And for M&A, the company wants more capital available. They don't like that. It's hard though to get away from having a new separate carry pool separated out like that one that that's probably tough. But what percent do you think are now? What percent deals you think are now? Speaker 1 I, I, we actually have, we have stats on this which I'd be happy to share with you separately. But I think I can say pretty comfortably, at least as far as my experience concerned, more than 50% of the simple asset deals in the US are done with the status quo with one wrinkle, which is that unfunded piece. Sometimes it's actually pretty fundamental to the go forward, the go forward thesis for the business. And so to say that the LP's have an option as to whether or not they participate introduces all kinds of uncertainty around sizing for that specific piece, not to mention the potential for incremental dilution as between the rollers who don't take up their pro rata share and the new money that's coming in. And so you have to get into questions of do I have to concoct a formula to ensure that the new investors aren't being unnecessarily diluted and upset in a up scenario. So I think in most cases you actually have rollers, at least as far as our deals are concerned, taking up their pro route, a share of the unfunded beyond follow ONS. They're just fees and expenses in the CV that need to be met. So it's just cash management, not to mention transaction expenses in the deal itself. And so I think inevitably we see rollers being required to take up their pro router share of the unfunded. Sometimes you bifurcate between sort of the expense unfunded and the follow on unfunded. But at a certain point, I think the complexity is not worth the exercise. That's always the case. Sometimes the LPAC and the LP base feels very strongly about it. And to my earlier point, but lose you as a sponsor to do this deal in a way that really makes sense and resonates with your LP base, particularly if you're between fundraising cycles, Yeah. Speaker 2 Completely, yeah. Speaker 1 Yes. Speaker 2 You always want happy LP's so Mark, I guess. Speaker 1 Question. Speaker 2 For you would be. Speaker 1 We're in the secondary industry. It's been growing 15%. Speaker 2 For. Speaker 1 Decades your team went from 10 people to 70 people it keeps growing and so. Speaker 2 What? Speaker 1 Like advice would you have for like people new in their careers they want to get in the secondary industry? Speaker 2 They. Speaker 1 Could be at a law firm that could be an advisor at a secondary fund. What do you like fundamental suggestions on just how to? How are you going to be successful with your career, life, whatever. I think the best advice that I ever received when it came to getting into secondaries was if it's hard, it's worth it. The other thing I would say is treat the secondaries market like the community that it is. No one is on an island in this space. Anybody who plays in this space with some level of frequency is going to encounter someone else in the space. And so be a good guy or good person more generally when it comes to those interactions. Because honestly, reputations matter a great deal. Are you someone that's commercial? Are you someone that's reasonable? Are you someone that's kind? I think that matters a great deal. And I think your reputation follows you a long way. And if it's a bad reputation, it could take a long time to to get rid of it's a good reputation. It's something you have to continue to cultivate even if you woke up on the wrong side of the bed that day. That's awesome. Thank you, Mike. Speaker 3 Figo is the managing partner of Kleinvale Partners. All of the names expressed in this podcast are those of its participants as of the date indicated and may not represent the views of Kleinvale Partners. Moreover, such views are subject to change without notice, and Kleinvale has not verified and cannot guarantee the accuracy of the information in this podcast. This podcast is being made available solely for general informational purposes. None of the following should be relied upon as legal, business, investment or tax advice and should not be, under any circumstances, be relied upon when making a decision to invest in any fund managed by Client Hill. Please refer to clienthill.com for additional important information.