LPs and GPs need
liquidity and partners
for multiple reasons
(not just distress).
Why do LPs and GPs Sell Winning Portfolios Early?
• HNWIs and family offices need liquidity when change happens (death, divorce, retirement)
• Corporate LPs change strategy every few years, just as CEOs/CFOs come and go
• LPs may need liquidity when purchasing a major asset (e.g., real estate)
• Market volatility and uncertainty may increase the need for cash
Non-institutional LPs may sell because:
• Sell a portion to show realized gains as they raise their next fund
• Sell to generate cash for operational expenses, recycling, or distributions
• Sell to hedge and take (some) money off the table
• Partner (raise capital) to exercise pro-rata rights
• Partner (co-invest) to increase investment in follow-on rounds
Early-stage GPs may sell (or partner):