What is a secondary buyout?

Usually run as an auction, often with the seller’s advisers and a buyer funding the price with new acquisition debt, so the existing financing is typically repaid at closing. The selling fund realizes the exit, while the buyer’s fund books a new investment. Often confused with a GP-led secondary or continuation vehicle, where the seller’s own manager keeps the asset.

Say Firm A bought a company for $300 million and sells it to Firm B for $450 million. Firm B is buying a company a financial owner has already built up.

It is now a common exit route, and buyers must find new ways to grow a company already improved once.