Is “Private” the new “Public”? The End of IPO-exits as we know them.

IPO windows can reopen quickly, and the past year has proved that point. Recent data from Pitch Book shows a rebound in U.S. sponsor-backed listings, with 2025 on track to be the strongest year since 2021. Roughly 59% of these issuers are trading above their offering prices, with sectors like energy, infrastructure, and financial services leading the resurgence. Yet these deals remain selective, concentrated, and exposed to macroeconomic volatility. They mark a cyclical uptick, not a structural reversal. 

For Founders globally, IPOs are no longer the inevitable liquidity path but one tactical tool among many. Liquidity, price discovery, and governance are increasingly negotiated privately through secondary transactions, structured processes, and disciplined valuation strategies. This shift reflects a new equilibrium where public-market scrutiny coexists with private-market structure, and where Founders must navigate strategic trade-offs deliberately to preserve flexibility, control, and value. 

This article analyzes this structural shift and outlines how Founders can use secondaries and valuation processes as strategic levers, anchored in clean process, strong governance, and defensible execution. Private markets are no longer the exception; they have become the core of how capital forms and circulates globally. 

Valuations, Secondaries, and the New Private Market 

Private markets have moved to the main stage. Companies like Open AI, Stripe, and SpaceX now set headline-grabbing valuations while regulators retrofit disclosure-heavy rules built for public markets to the opaque and fast-moving reality of private capital formation. The legal question is no longer whether private markets are like public markets, but how to preserve pricing integrity, manage conflicts, and protect stakeholders without dulling the control and flexibility advantages of staying private. Put differently: valuations and secondaries have become twin pillars of a new private-public equilibrium, where ownership, control, and staged liquidity are negotiated on founder-driven terms. 

This new dynamic has turned valuation into more than a pricing exercise and secondaries into more than a liquidity tool. Valuations now shape governance, deal strategy, and investor signaling, while secondaries give Founders flexibility to manage ownership and timing on their own terms. Together, they define how value is distributed, who stays at the table, and how long companies can choose to remain private. 

The shift: staying private is becoming the default 

The last decade entrenched an issuer choice regime: successful private firms can raise deep pools of capital, stage liquidity, and remain private indefinitely; going public is a choice, not a necessity. Secondary markets ranging from company led tenders to GPled continuation funds now perform some of the public market’s core functions, most notably price discovery and liquidity.  

Mutual funds invest in mature private firms; latest age financing round that look more like a good IPO set reference prices; and platforms like Forge, Car tax, Nasdaq Private Markets, among others, have improved intermediation for private share transfers. In this environment, the category “public company” has grown less coherent, and the tradeoffs Founders face between “public” and “private” have become highly firm specific. Private markets have absorbed functions once associated with public markets, while public markets have imported private style governance devices such as dual class stock and shareholder agreements.

The collapse of the SPAC boom only accelerated this trend. As an exit vector, SPACs briefly promised a “third way,” but regulatory response, litigation risk, and market discipline have largely restored SPACs to a niche. Continuation funds, reorganized portfolios, and structured secondaries stepped into the gap. For venture backed companies, the consequence is straightforward: in today’s environment, secondaries are often a more realistic route to recurring liquidity than an IPO timetable that is beyond any one company’s control.

What secondaries are and why they matter 

Secondaries operate at three levels: LP-led, GP-led, and company-level transactions.

LPled deals: a limited partner sells its interests in one or more private funds to a buyer that assumes the remaining obligations and economics. GPled transactions (continuation funds and related recapitalizations): the sponsor creates a new vehicle to acquire one or more assets from an existing fund, offering existing LPs a choice to sell or roll and often bringing in new capital aligned to a longer hold. Company level secondaries: private company securities are sold by insiders, employees, or early investors, sometimes alongside a primary raise.

For Founders, these mechanisms deliver three concrete benefits. First, liquidity and retention: staged liquidity supports recruitment and retention by allowing employees and early builders to realize value without forcing a premature exit. Second, price signals: carefully designed tenders and market checked processes can validate (or challenge) internal valuations, inform option pricing, and calibrate future financing strategy. Third, capital structure management: can refresh the cap table, consolidate small positions, and introduce aligned, value add holders while honoring transfer restrictions and information controls.

The valuation tension: fair value versus negotiated price 

Founders live in two valuation regimes at once. On the one hand, negotiated round prices and secondary tender prices that reflect momentum, optionality, and bargaining dynamics, and represent how much control is given up.⁹ On the other, fair value marks are produced for financial reporting, fund net asset values (NAVs), or specific tax compliance regimes (such as 409A in the U.S.) using formal valuation frameworks. The gap between them is usually material. 

Empirical research consistently shows that headline post money valuations of venture backed companies often overstate fair value when the protective terms embedded in preferred stock, liquidation preferences, participation, IPO ratchets (contractual anti-dilution or price-adjustment mechanisms that protect investors if an IPO occurs at a lower valuation than expected), and conversion vetoes are ignored. Adjusting for those terms, the implied value of common equity can be substantially lower than the headline valuation.¹⁰ That does not invalidate negotiated pricing; it highlights that different instruments (preferred versus common) and different contexts (a competitive round versus a technical mark) price distinct economic rights.  

For Founders, the practical implication is twofold. First, be intentional about which valuation you are signaling, to whom, and why. A company run tender that prices at or near the most recent preferred round sends a different message than a narrow, negotiated block sale at a discount. Second, document the rationale. Even if you are not a registered public company, regulators and counterparties increasingly expect public like process discipline. Well organized valuation files, methodology, discount rationales, and board materials can help align expectations, support auditor and fund LP reviews, and reduce the risk of criticism.

The supervision and enforcement temperature: why process and documentation matter 

Private markets operate with fewer mandated disclosures and thinner continuous pricing. Those features increase the potential for asymmetry and conflict; especially in secondary contexts where one side possesses more information. Scholars have urged greater public enforcement in private markets precisely because private litigation tools (e.g., Rule 10b5 class actions in the U.S.) fit poorly when there is no efficient market price and plaintiffs are heterogeneous. The SEC has scrutinized private resales and platform activity in the past and has pushed for better gatekeeping, disclosure, and conflict management around private tenders and resale exemptions.

Regulators have also turned to fund level protections in GPled processes. Recent SEC private fund rules require fairness or valuation opinions for GPled secondaries and associated conflict disclosures, reflecting concern that sponsors set both sides of the trade. Market participants are skeptical that fairness opinions alone solve conflicts, but they have become standard inputs into a broader procedural record.  

For company level secondaries, the legal choke points are familiar but unforgiving: transfer restrictions and Rights of First Refusal (ROFRs); broker dealer and “underwriter” status if the company is involved; resale exemptions; holder of record thresholds; Rule 701 (a U.S. securities law exemption for compensatory issuances by private companies) and insider trading controls; and antifraud liability. None of these should deter a well run liquidity program; they do require sequencing, role discipline, and papering. 

Advantages and risks: designing Founder friendly secondaries that stand up 

Well-structured secondaries create tangible strategic value for Founders. They relieve liquidity pressure without forcing suboptimal exits, improve morale by providing liquidity, clean cap tables and attract aligned long-term holders.¹⁷ However, the design choices carry legal and reputational risk. Three elements typically define whether a secondary program stands up under scrutiny: 

First, independent oversight. If insiders, directors or significant investors are buying from employees or early holders, the company should consider forming an independent committee to approve the process design, information flows and price setting. The committee should retain its own advisors and document the alternatives considered. This is not a concession to formality, it is protection for the board and a sign of fairness. 

Second, market checks proportional to the stakes. Even in private tender programs, there are practical ways to validate prices without running an uncontrolled auction. Where appropriate, the company should obtain a valuation or fairness opinion (while acknowledging their limits) and keep a clear record of how the price was determined, who had access to the information, and why the format was chosen. 

Third, fairness and information symmetry for employees. Employees are frequently most vulnerable to confusion between preferred round valuations and the economics of their common stock options. Clear, standardized materials that explain capital structure, preference stacks, and expected proceeds across scenarios can reduce risk. Timing liquidity windows to avoid trading when insiders possess material nonpublic information and enforcing blackout policies help mitigate insider trading risk.

GP-led continuation funds work when run well. Sellers get liquidity, rollers stay invested, and sponsors focus on top assets. Conflicts are real, so follow ILPA’s baseline: engage LPs early, provide clear disclosures on alternatives, fees and conflicts, offer a genuine roll or sell choice, and obtain an independent opinion. Fairness opinions are not a cure-all; what matters most are fair terms and a credible process.

Practical takeaways for Founders 

Act public in process attitude, even if you remain private in form. The structure of a good secondary offering looks more like a public company process than a bespoke side letter. Five Founder focused practices can make secondaries “strategic” rather than “reactive”: 

First, set a liquidity philosophy early and revisit it annually. Decide, at the board level, how you think about staged liquidity for employees and early investors: who should be eligible; when and how frequently; what percentage caps make sense; and how pricing should be determined relative to the most recent financing and internal marks. Treat these as policy judgments that align with recruiting, retention, and capital strategy. 

Second, build data discipline. Leverage the 701-information baseline,  and add consistent operational KPIs, unit economics, and cohort analyses appropriate to your stage; use a secure data room and keep a clean record of questions and answers.  

Third, price with principles. Choose a pricing mechanism and stick to it. Avoid one off sweetheart prices that will be impossible to sustain later. Where there is material uncertainty, consider structured solutions (e.g., holdbacks, earnouts, or contingent value rights) that share risk while delivering cash today. 

Fourth, respect roles to avoid regulatory tripwires and build a defensible record. Keep the company out of the business of brokering. Use registered intermediaries for solicitation and execution. Enforce ROFRs and transfer restrictions consistently. Use SPVs or trusts carefully and with counsel. Adopt and enforce insider trading policies and blackout calendars around liquidity windows.

Fifth, align fund level dynamics with company level health. If your lead sponsor proposes a continuation vehicle or structured secondary at the fund level, evaluate the downstream effects on your company: follow on capacity, governance continuity, and signaling risk. Ask for an explanation of alternatives and how conflicts were managed. Robust GPled processes can stabilize your cap table and support longer value creation timelines; weak ones can create noise and misalignment precisely when you need focus.

Finally, calibrate communications to your audiences. Employees, secondary buyers, existing investors, and counterparties will read your liquidity moves as signals about performance, confidence, and runway. A coherent narrative reduces rumor, resignation risk, and misinterpretation. When in doubt, overcommunicate process and under promise outcomes.

Using secondaries to strengthen your market posture 

Secondaries are no longer just a prelude to exit; they are a core tool of private market strategy. For Founders, the winning posture is to use them deliberately to achieve business goals while building a governance record that can withstand future diligence from auditors, acquirers, or even the SEC. The private public equilibrium has shifted: public style process quality has become the price of the “private premium” in control and flexibility. 

When executed thoughtfully, controlled secondaries can: 

• Attract and retain talent by offering credible, recurring liquidity windows without giving up control of the timing or format of exits. 

• Reduce agency costs and board friction by realigning the cap table toward supportive, long horizon holders and removing parties whose liquidity needs drive misaligned pressure.  

• Prepare you for public style scrutiny by building the muscle memory of process, disclosure discipline, and conflict management on your terms and timeline. 

The playbook is not complicated, but decide your philosophy. Design for fairness, document relentlessly, and execute through the right intermediaries.  

Founders who adopt a public-in process, private-in structure attitude, will be best positioned to thrive in the new equilibrium preserving the advantages of staying private while delivering integrity in pricing, confidence in governance, and liquidity for the people building the company. Liquidity strategy is governance strategy. Founders who understand that will set the terms of their own runway. 

If you have any questions or want to explore these topics further, feel free to reach out. 

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