The European secondaries landscape mirrors its US counterpart in structure but diverges sharply in size, fragmentation, and the mechanics that govern how continuation vehicles get done, according to Sebastien Burdel, a Partner in Ares Secondaries Group and Oliver Altendorf, a Director at Piper Sandler.
In a fascinating conversation with Liquid Courage's Joncarlo Mark (Upwelling Capital) and David Snow, Burdel and Altendorf paint the picture of a market in transition — thirty percent of European secondary volume is expected to come from CVs this year — while flagging structural friction points unique to Europe, from the fund-level waterfall to multi-jurisdiction tax complexity, that can derail deals that would close cleanly in the US.
The episode also breaks new ground on private credit CVs, where a wave of 2019-vintage funds sitting at 0.6X DPI is quietly creating a new and fast-growing corner of the secondaries market on both sides of the Atlantic.
Key Takeaways
• CV and M&A markets in Europe are starting to 'blur' - the line between a traditional M&A exit and a continuation vehicle is increasingly porous in Europe, with Oliver Altendorf noting that assets now routinely switch channels mid-process — and in at least one recent case, the CV market actually cleared at a higher valuation than the M&A process, a near-unprecedented outcome that points to how competitive the buy side has become.
• European waterfalls can 'twist the reason' for a CV - unlike the US deal-by-deal carry structure, the European fund-level waterfall creates a specific danger zone — a GP hovering just below their hurdle rate whose primary motivation for a CV is to de-risk their carry rather than unlock value for investors, leaving them, as Sebastien Burdel puts it, "neither a good seller nor a good buyer" of the asset.
• Valuation disappointments lead GPs to the CV market - a recurring pattern Burdel flags is the GP who runs a full sale process, fails to attract a bid at their expected price, and then pivots to the secondary market as a last resort — a dynamic that has grown more visible as CVs now represent nearly twenty percent of all private equity exits, drawing in assets and managers with no legitimate place in that market.
• The 'ideal candidate' for a CV is a successful company - contrary to the perception that CVs exist to manage problem assets, Burdel describes the archetypal European CV as a company held three to four years at a three-to-four-times return, where the GP simply believes it would be leaving money on the table to sell now — and the CV structure allows existing LPs to take liquidity while new capital funds the next leg of growth, whether organic, through M&A, or via geographic expansion into new European markets or the US.
Access the full transcript and a searchable library of secondaries content at the Liquid Courage Substack.
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