The private equity secondaries market is increasingly attracting attention from some of the most profitable law firms in the United States. This once-niche sector, which involves private equity sponsors trading stakes with other capital players, is projected to reach a value of $185 billion this year, marking a significant increase from prior years.
This prediction reflects a trajectory observed by many of these top firms, which have seen revenue and profit climbing at a rate higher than the industry average, largely propelled by the secondaries market boom. Jefferies, an investment bank, recently reported a substantial jump in the volume of these transactions, moving from $112 billion in the previous year (2023) to $162 billion in 2024. With their forecast for further growth this year, the implications for law firms are profound.
Firms like Proskauer have long positioned themselves within this arena, having developed a capable team focused on secondary transactions. The market’s expansion is highlighted by the increased deal values, with 51 secondaries deals exceeding $1 billion in value last year alone, compared to 34 a year earlier. Meanwhile, Wells Fargo’s Legal Specialty Group has noted that law firms involved in the secondaries practice are logging legal service demand growth at twice the industry pace.
For firms like Latham & Watkins, the secondaries market is not merely a side practice but an integral part of their full-service offerings to private equity clients. The strategy involves interconnected deals where clients benefit from both initial capital investment guidance and secondary market expertise, helping them maximize their investment opportunities.
The lack of seasoned talent in this burgeoning sector hasn’t deterred law firms from attempting to penetrate it. This scarcity of experienced lawyers underscores the competitive advantage for those already established in the secondaries field. As Bloomberg Law observes, the interests of law firms will continue to align closely with the flow of capital. As long as secondaries retain their appeal in the investment community, the quest for experienced legal professionals in this area is set to persist.