The Discount Is the Wrong Question in Private Equity Secondaries

Richard Chow, Partner at PJT Partners (NYSE: PJT)

Secondary deals are often judged by a single metric: the discount. Richard Chow thinks that's the wrong place to start.

After spending most of his career investing in and advising on secondaries, Richard has seen what happens when investors focus too heavily on price and miss what is actually driving the transaction. Richard and Kison walk through the decisions behind LP-led deals, continuation vehicles, private-market liquidity, and some of the assumptions buyers routinely get wrong.

They also get into Richard's own investing mistakes, including a SpaceX opportunity he passed on, and what it taught him about underwriting assets whose real upside may sit well beyond the typical investment horizon.

What You'll Learn

• Why the discount can be the wrong starting point in a secondary deal
• What separates LP-led and GP-led secondary transactions
• How continuation vehicles change the liquidity equation
• Where IRR can create the wrong impression of investment performance
• Why Richard believes buyers often approach diligence too narrowly
• What passing on SpaceX taught him about underwriting long-term compounders

If you're evaluating a secondary opportunity and defaulting to "what's the discount," DealPilot's Buyer-Led M&A™ Certification is built on that instinct: stop taking the other side's framing and drive your own evaluation instead.

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Episode Chapters

[00:00] Intro

[03:23] Career Path Into Secondaries

[05:49] Why the Secondary Market Exists

[07:10] LP Interests vs Continuation Vehicles

[14:28] LP Versus GP-Led Deal Flow

[15:52] Endowments Face a China Problem

[18:19] Why the Discount Is Wrong

[21:50] Marketing a Deal, Finding Buyers

[30:34] Employee Option Secondaries Explained

[32:05] How IRR Misleads Retail Investors

[35:03] Why Secondaries Data Can't Be Trusted

[42:50] Private Credit Secondaries Explained

[45:16] The SpaceX Valuation Lesson

[47:24] Diligence on Complex Cap Tables

[50:21] The Most Common Buyer Mistake