The demand for expertise in private equity secondaries is reshaping the landscape of major law firms, with many firms racing to establish a foothold in this burgeoning market. As traditional dealmaking slows, the secondaries market, which involves private equity sponsors offloading assets or selling ownership stakes, is witnessing significant growth. Last year, transactions in this space were projected to exceed $140 billion, as per data from investment bank Jefferies, providing a compelling alternative for investors at a time when exits and IPOs are challenging to execute.
According to Ethan Klingsberg, a partner with Freshfields, secondaries are set to become primary vehicles for private equity liquidity. Major law firms such as Kirkland & Ellis, Latham & Watkins, and Simpson Thacher & Bartlett, known for their robust M&A practices, are now dominant players in the secondaries market. However, the surge in such deals has heightened concern over a prevailing talent gap, prompting a reevaluation of hiring and training strategies across firms.
The secondaries market, which some firms believe will continue to expand, presents unique challenges and demands a specialist skillset. Timothy Clark, who recently joined Freshfields from Goodwin Procter, highlights the necessity for law firms to have confidence in building and growing their capabilities in this field. The market’s exclusivity is such that only a small number of law firms actively compete here, as shown in a survey citing 20 firms with substantial involvement in secondary deals.
Kirkland & Ellis, a leader in secondary transactions, has a dedicated team of around 60 lawyers, tasked with handling approximately $50 billion in general partner-led deals. According to Sean Hill, a partner at Kirkland, expertise in secondaries is now a standalone area of practice, distinct from conventional fund services. The firm is currently expanding its team in response to increasing business activity.
Meanwhile, the entry of new players, such as Mustafa Siddiqui’s recently launched firm SQ Capital, signals ongoing interest and confidence in the market’s potential. Despite the challenges posed by a bottleneck of unsold portfolio companies, firms remain optimistic about resolving the shortfall in capital and professional talent. Isabel Dische of Ropes & Gray, along with other industry leaders, emphasizes the importance of providing comprehensive training to bridge this gap.
DLA Piper is proactively enhancing its legal talent pool, recently adding former Morrison Foerster partner Nick Sheets to its team. David Parrish, global co-chair of the firm’s investment funds practice, acknowledges the difficulties of entering the market but remains hopeful about the opportunities for those willing to innovate. As the market evolves, law firms are likely to continue refining their strategies to remain competitive in this dynamic sector.
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