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Between the two of us, we have been practicing law in Silicon Valley since the late 1990s. We have watched the dot-com bubble inflate and burst, the credit markets seize, the long zero-rate boom that followed, and the reckoning that came after. We have sat across the table from founders at the top of the market and the same founders eighteen months later, and the one thing you can count on in this business is the cycle. So when a corner of private markets that nobody used to talk about openly suddenly becomes the thing everybody wants to talk about, we pay attention.

Five and a half years ago, our team joined �鶹ֱ�� & Lardner to restart its presence in San Francisco. The firm had deep roots across the country, but we believed it needed a real home in the place where so much of the private capital story actually gets written. Not a satellite office. A home. That took patience. It took years of building relationships one conversation at a time, of showing up for clients through a pandemic, a funding boom, a brutal correction, and everything since.

The other evening, standing in our new space on the water, watching the light come off the bay, it was hard not to feel that the journey had moved one more step forward. The views are something else, the kind that make people stop mid-sentence. But what made the night was the room. We had put together a panel on secondary transactions in private markets, and we expected a decent turnout. What we got was standing room only. People lined the back wall, sat on windowsills, leaned in from the hallway. For a subject that people used to discuss in whispers, the  crowded room told us as much about how far we have come, as where this market is heading, and fast.

The room we built

Kelly moderated, and we had assembled a panel we would put up against any in the country.

Ira Simkhovitch brought the view from the most active corner of the business. Ira spent years at Industry Ventures, the venture secondaries pioneer that largely wrote the playbook for buying venture fund interests and direct stakes. When Goldman Sachs bought Industry Ventures, a deal that closed at the start of this year, Ira and his team moved inside Goldman’s External Investing Group. He now sits where a two-decade specialty franchise meets the balance sheet of a global bank. There are not many better seats from which to watch venture liquidity form.

Greg Back, Founding Partner of CatchLight Capital Partners, brought the buy side, the person on the other end of the trade who has to decide what to pay and which assets are worth owning. CatchLight has built a specialty in a part of the market most buyers steer clear of: situations where investors on the cap table come from countries that are geographically or politically sensitive. Cleaning up a cap table that carries that kind of exposure is delicate work, often urgent, and it is exactly the kind of problem a thoughtful secondary buyer is built to solve.

Barrett Cohn brought the market maker’s vantage. Barrett founded and runs Scenic, the San Francisco investment bank he started after watching the early Facebook and Twitter teams struggle with illiquidity. Scenic took the private company secondary market and gave it structure, setting the best practices for helping founders and early employees sell stock quietly while their companies stayed private and kept control. In a little over a decade, Scenic has handled billions of dollars in private stock sales, and lately the firm has raised its own funds to step in as a buyer where the traditional exits have stalled. They call Barrett the deal whisperer of Silicon Valley, and on this subject, the name fits.

Eric Benhamou set the table with the history, and nobody is better qualified to do it. Eric ran 3Com as CEO through the 1990s and grew it into a Fortune 500 company, then ran Palm, whose Palm Pilot was the iconic handheld of its day and, in a real sense, the grandfather of the smartphone in your pocket right now. He has been through nine IPOs and dozens of acquisitions, sat on more than two dozen boards, and since 2003 has run Benhamou Global Ventures. When he talks about how exits actually work, he is talking from having lived every stage of the road from startup to Global Fortune 500.

Louis rounded out the panel with the legal and structural view that runs through all of it.

What follows are our takeaways from that conversation, all of them, seen through the eyes of two lawyers who spend their days putting these deals together and watching the legal plumbing strain to keep up.

The numbers are hard to believe, and 2025 made them official

When we started planning this panel, the working assumption was that 2025 might match 2024’s record of roughly $160 billion in global secondary volume. It did not match it. It ran past it. The full-year numbers came in north of $225 billion, the biggest year on record by a wide margin, with the pace actually picking up as the year went on. Roughly half of that was LPs selling their fund stakes to raise cash; most of the rest was GP-led deals, the continuation vehicles and similar structures. For perspective, this whole market was about $26 billion in 2013.

Secondaries are not a backwater anymore, and they have shed the old stigma. They are now a core part of how private markets work. The real question, and it is the one worth arguing about, is whether this is a permanent change in the structure of the market or a cyclical response to a closed exit window. After enough years of watching cycles, we hold that question open. We will not know until the exits reopen and we see what stays.

Eric’s pressure cooker: too many funds, no way out

Eric’s account of why this is happening was the part of the night people kept repeating afterward. Over the last ten years, Silicon Valley raised staggering amounts of venture capital and pushed it out into an enormous number of companies through an enormous number of funds. There are, to put it bluntly, too many funds, and now they cannot get out. The IPO market has become a venue for a handful of companies worth a trillion dollars or close to it, not a real path for the broad middle of the portfolio. The tech M&A market has been mostly closed for business. Interest rates stayed high long enough to choke off the cheap debt that used to grease exits. And on top of all of it, AI is taking apart the software business models that a whole generation of venture bets was built on, which makes a lot of those companies harder to value and harder to sell.

Money went in, and it is not coming back out through the usual pipes. Eric reached for the image that stuck: the whole thing is a pressure cooker. You keep adding heat, more capital, more companies, more time on the clock, but the valve that used to let the steam out, the exit, is jammed shut. The pressure does not go away. It builds.

Louis framed the same thing from the legal side. The flywheel of innovation only turns if capital gets invested, returned to the limited partners, and then put back to work in new funds that incubate and hatch the next batch of startups. Money out, money back, money out again, faster each turn. That cycle is what has powered this place for decades, and right now it has seized up. The money went in, but the return leg, the part where it flows back to the LPs so they can commit to the next vintage, has stalled. A clogged flywheel does not just slow this turn. It starves the next one.

The DPI drought is what is really driving this

That pressure has a name, and it comes up on every LP’s quarterly call: DPI, distributions to paid-in capital. For the 2019 through 2021 vintages, average DPI sits well below where it should be. Plenty of growth and late-stage funds from those years are stuck at 0.1x to 0.3x. Put simply, the LPs who wrote big checks at the top of the cycle are three to five years in and have gotten almost nothing back.

This is the single biggest topic for LPs right now, and it is the engine of the LP-led market. The shortfall is pushing LPs to sell fund interests to raise their own cash, and it is pushing GPs to offer structured liquidity they never used to consider. The better read, and the one the data supports, is that LPs are increasingly selling as a deliberate portfolio choice rather than out of panic. We have seen real panic before, and this is not yet that. But the drought is real, and until it breaks, it will keep driving volume.

Pricing got better, but the gap is the real story

Here is the good news. Pricing has improved a lot. The best assets, especially buyout stakes, now change hands close to par, a long way from the steep discounts of 2022 and 2023. But the average hides what is really going on, which is the spread. Venture and growth stakes still trade at real discounts, and the long tail runs to 30, 40 percent off and worse. The gap between the haves and the have-nots inside a single portfolio has become the defining feature of secondary pricing. A headline discount number means almost nothing until you ask which asset you are talking about.

Continuation vehicles, and where the line sits

Nowhere does our work get more delicate than with continuation vehicles, and the panel did not dance around the tension. A continuation vehicle can be a genuinely good tool that lines up everyone’s interests, a way to give the existing LPs an exit while a GP and some LPS hold a strong asset for the upside still to come. Or it can be a way for a GP or LP to set its own valuation and reset the economics in its own favor. The difference lives entirely in the process, the disclosure, and whether the pricing is set at arm’s length. The regulatory and fiduciary questions here are moving fast, and from where we sit, the legal architecture is still being built while the planes are taking off.

Employee liquidity has become a way to keep your best people

One of the more encouraging shifts, and one Barrett and Greg pulled out, is on the employee side. Tender offers for employee shares are growing, and the way people read them has flipped. Companies have figured out that a structured secondary program is a tool for keeping talent. Founders care about holding on to their key people, and a regular, well-run liquidity window is now seen as a way to retain them rather than a sign that something is wrong. Done right, it is a feature you offer when you are recruiting, not an admission of weakness.

The relay: everyone is picking their leg of the race

A useful way to picture it came up: the relay. Different kinds of investors are sorting themselves into different legs of a company’s life. Early venture hands off to growth, growth hands off to dedicated secondary buyers, and eventually it all hands off to the public markets. The dedicated secondary funds are raising vehicles of a size we have never seen before for this genre, built specifically to run that middle leg, and several flagship funds have now crossed $20 billion. What it means is that secondaries are becoming a planned stage in how capital gets formed, not a one-off scramble for cash. That changes how founders and funds ought to plan, years ahead of time.

AI: the thing pressing on the old models is also the hottest thing to own

Then there is AI, and the irony is hard to miss. The same technology pressing on the old software models is also the hottest thing to own in the secondary market. Shares of the marquee private AI companies, the Anthropic and OpenAI tier, trade actively at very high valuations, which means real volume and real concentration risk at the same time. There is a lot of hope riding on the long-awaited public debuts of companies like SpaceX, Anthropic and OpenAI to finally pry the IPO window open (and SpaceX had a strong debut). They will, and they will let some steam out of the pressure cooker. But a handful of trillion-dollar listings releases pressure only at the very top. It does nothing for the thousands of perfectly good companies stuck in the middle of the portfolio with no path to the public markets and no buyer in sight. Barrett put a number on it that stuck with us: in his view it will take something like ten years to work through this crop of companies. Not ten months. Ten years.

The question underneath all the others

Which brings us to the provocation that closed the night, the one we keep turning over. As the secondary market gets bigger, faster, and easier to access, a basic question shows up: if you can trade private shares freely, what makes them private?

The whole bargain of private markets, lock your money up for ten years or more, pay premium fees, trust the patient-capital model, rests on illiquidity being the price you pay for outsized returns. A market that increasingly offers a way out tests that bargain head-on. Is this coming-together of private and public markets a sign of a market growing up, or is it the slow erosion of the very thing that made private markets worth the lockup and the fees? That is the strategic question for the next several years, and we do not think anyone in that room would tell you they know the answer.

What we do believe is that the next eighteen months matter. If distributions do not start to flow, the strain hits everywhere at once: the patience of the LPs, the economics the GPs built their firms on, and the ability of anyone to raise the next fund. The secondary market is the pressure valve holding all of that together right now, and a valve is not a solution. It buys time.

Standing in that room on the water, watching a packed house argue about the future of an asset class that people used to discuss in whispers, what struck us was not how much money is moving. It was how unsettled the smartest people in the business still are about what it all means. Five and a half years ago we bet that San Francisco was where these conversations would happen. That night, with the bay lit up behind a room with no empty seats, the bet looked right. The harder question, the one nobody in the room could answer, is what private markets become if the thing that made them private keeps slipping away. We have seen enough cycles to know that the questions nobody can answer yet are usually the ones that matter most.

Louis Lehot is a senior partner at �鶹ֱ�� & Lardner LLP. Kelly Boyd is his colleague at the firm. The views expressed here are their own and do not constitute legal advice.