NK Insight – Private markets: why companies are staying private for longer and what it means for companies and their shareholders?

The public market is no longer the default route to growth capital. Many of today’s most valuable companies can raise large amounts privately, remain private for longer, and create a substantial share of their value before they ever list. As a result, a growing portion of a company’s value creation may now take place before its shares are publicly traded.

This does not mean IPOs have disappeared. Rather, they have become one exit route among several: strategic acquisitions, continuation vehicles, and secondary sales now give founders, employees, and early investors ways to realise value without forcing a public listing. J.P. Morgan notes that IPOs accounted for only about 40% of total US venture-capital exit value in 2025*.

The shift is driven by capital abundance as much as by IPO-market conditions. Private markets now provide late-stage companies with sufficient capital to fund expansion, while avoiding the disclosure obligations, quarterly-reporting pressure, and shareholder scrutiny of public markets.

Companies are therefore reaching much greater scale before listing, shifting more of their value-creation phase into private markets. The flip side is that investors in these companies receive far less information than public-market shareholders.

Capital has adapted. Late-stage private companies no longer depend solely on venture funds: growth-equity investors, institutions and family offices increasingly participate in later rounds or purchase existing shares.

At the same time, secondary transactions have become a structural feature of the market. Employees and early shareholders can obtain liquidity through tender offers or negotiated transfers, while new investors gain exposure to more mature companies. This creates a more continuous private-market ecosystem rather than one that depends entirely on an IPO window.

Secondaries have moved from a niche liquidity solution to a distinct asset class. Global secondary transaction volume reached a record $240bn in 2025, up 48% year over year, according to Jefferies*. This figure mainly covers transactions in private-fund interests (LP-led and GP-led); direct secondary sales of company shares represent a smaller segment.

The growth reflects a simple imbalance: investors want liquidity, but many high-quality companies are not listing.

Waiting for large listings has kept investors’ capital locked up for long periods.

Secondaries release capital for early investors and employees, while allowing new investors to buy positions in companies that have already demonstrated scale, revenue, and in some cases profitability. These positions nevertheless remain exposed to valuation uncertainty, illiquidity and the risk of capital loss, and secondary prices can differ significantly from the latest funding-round valuation.

*Jefferies, Global Secondary Market Review, Private Capital Advisory, January 2026

Exposure to late-stage private companies generally takes one of three routes:

•   Primary late-stage rounds: New capital is invested directly into the company, usually through institutional investors or well-connected co-investors.

•   Company tender offers: The company facilitates the purchase of existing shares from employees or early investors, often at a price it approves.

•   Secondary transfers and SPVs: An existing holder sells shares, often packaged into a special purpose vehicle that pools several investors.

Direct investment can provide a cleaner relationship with the underlying company, but access is usually limited. SPVs aggregate capital into a single position, but add an intermediary layer between the investor and the company.

SPV structures carry specific risks. Layered structures can leave investors sitting far away from the underlying company and from the real liquidity opportunity. Each extra layer can add fees, reduce information and limit control over when and how to exit. Key points to assess include how close the vehicle sits to the cap table, who controls the vehicle and what rights its investors hold.

Investments in unlisted companies carry significant risks, including the risk of losing all of the capital invested, a lack of liquidity and no guaranteed exit, uncertain and infrequent valuations, limited access to information, concentration on a single company, and additional fees and legal complexity when held through vehicles. They are not suitable for all investors.

A growing part of companies’ growth cycle now takes place in private markets. This shift creates new financing and liquidity options for companies and their shareholders, but also significant complexity and risk. Any assessment should focus on valuation, structure, fees, rights, liquidity terms and a clear line of sight to the underlying asset.