M&A Science Live - The Discount is the Wrong Question: A Secondaries Primer for Buy-Side Practitioners

Secondary markets are growing, but the way most buy-side teams engage with them hasn't changed. The first question is almost always "what's the discount?" It feels right. You're buying someone else's position, so anchoring on price-to-NAV seems like the obvious move.

It isn't. The discount is an output. It reflects the seller's liquidity need, not the asset's value. Buyers who start there miss the real question: what are you actually buying, who's managing it, and why does the price exist? That shift in framing changes the entire diligence approach.

Richard Chow has sat on every side of this market: as an LP, a direct buyer, a portfolio manager at Abu Dhabi Investment Authority, and now as a Partner at PJT Partners structuring liquidity solutions for GPs and LPs. He has a clear-eyed view of where buy-side practitioners get into trouble and what doing this well actually looks like.

What You'll Learn:

• Why the discount is the wrong first question and what to ask instead when evaluating a secondary opportunity
• How to distinguish the three main transaction types: LP interests, continuation vehicles, and direct company secondaries
• How to identify when a continuation vehicle is driven by asset conviction versus fee motive, and why that distinction changes your diligence
• Why secondary market volume data is almost always wrong and what the opacity problem means for buyers trying to understand the market
• When corp dev practitioners should use secondaries as a tool and what conditions make it the right move
• How complex cap tables with minority stakes and legacy LP positions affect diligence on a target