Types of Secondary Private Equity Transactions

In the world of secondary private equity transactions, you may be confused as to what is and isn't allowed in the secondary market. And besides, just what is the secondary market? The secondary market refers to the buying and selling of investor commitments.

Meant to be for the long-term investment, there is no public market. However, these investments are great for entities looking to diversify their portfolios through private equity. It's a bustling trade, currently worth over three billion dollars yearly, and includes some high profile companies such as JP Morgan Chase and Morgan Stanley banks. Secondary private equity transactions can be confusing, so let your investment firm walk you through the process.

Secondary transactions more or less are broken into two types of transactions, the first being the sale of limited partnership interests. This type of transaction occurs when an investor with a private equity in a limited partnership is ready to sell his or her interests -- such as buyout -- venture capital and real estate in a partnership. He or she releases these interests to the buyer.

Another secondary interest is the sale of direct interests in a company, partnership or investment. This occurs with the sale of direct investments and funds rather than a limited partnership within an investment. Pieces of the portfolio will go to the buyer.

Remember to contact your investment firm for more information on secondary private equity transactions. They are potentially a great long-term investment to diversify yours or your company's portfolio.

Horizon Partners (http://horizon-partners.net) is a financial information website. Billings Farnsworth is a freelance writer.