Entry pricing shapes a private market return. How and when a position is realized determines how much of it becomes cash. In 2026, that second decision has become harder to defer.
Limited partners recorded a fourth consecutive year of record-low distributions from buyout funds in 2025, and distributions follow exits. As Bain & Company's Alexander De Mol puts it: “If I'm not seeing the money come back, I also can't make new commitments to fund.”
Against that backdrop, the mechanisms available to generate liquidity have widened — and they are moving in different directions. Five routes are examined below:
The full exit: A trade sale, sponsor-to-sponsor transaction or public listing realizes the entire position. It is the most complete form of realization and the simplest to administer. Its execution is wholly dependent on price agreement between buyer and seller.
The partial exit: Selling a minority stake converts part of the position to cash while retaining exposure to further appreciation. The retained stake carries the remaining risk as well as the remaining upside, and the sold portion forgoes whatever value accrues afterwards.
The strategic investor: A partial sale to a party bringing distribution, sector access or balance sheet depth provides cash alongside operational capability. It also adds a party to the governance of the asset, and the contribution is realized over time rather than at signing.
The continuation vehicle: Existing investors elect cash or continued exposure; new capital funds the transfer. Jefferies reported a global secondary volume of $118 billion in H1 2026, a first-half record and 15% above H1 2025. GP-led transactions accounted for $62 billion, or 53% of total activity — the first time since 2021 that GP-led volume has represented the majority of the market. The structure extends the hold under the same manager. It also requires investors to price an option and involves a manager transacting with an asset it already owns — which is why governance and valuation attract scrutiny.
Refinancing: A dividend recapitalization raises debt at the company level; a NAV facility borrows against a fund portfolio. Both generate cash without selling equity, and both add leverage. This route has contracted: Pitchbook reported US dividend recapitalizations of $28.69 billion in the year to 2 September 2026, down 39% year on year.
Both positions are held by experienced practitioners, and the data does not settle between them. Each route allocates three things differently: how much cash is realized and when, how much exposure is retained, and who holds control. Each carries a cost — fees, leverage, dilution, governance concession, forgone appreciation, and sometimes investor confidence rather than a number. Which combination fits depends on the asset, the fund, and the cycle.
Disclaimer
This article forms part of EIH's ongoing exploration of the forces shaping future economies. It is provided for general informational purposes only and does not constitute investment, financial or professional advice, or a recommendation of any strategy, structure or transaction.