Secondaries step into the mainstream

For founders, employees and early investors in private companies, realising the value of their shares has traditionally meant waiting for a sale or stock market listing. With companies staying private for longer and exit markets remaining selective, secondary share sales are increasingly filling the gap. 

What is a secondary sale?

Unlike a conventional funding round, where a company issues new shares and receives the proceeds, a secondary involves an existing shareholder selling shares to another investor without a full exit. This may take the form of a direct sale, a company-organised employee tender offer or a company buyback, and is often implemented alongside a primary fundraising.

The UK has also introduced the PISCES regulatory framework, which enables participating private companies to arrange controlled share-trading windows through FCA-approved platforms. A company can control when trading takes place, who may buy its shares, the shares available and any floor or ceiling price. PISCES is not a fundraising venue: only existing shares are traded, and participation is limited to eligible investors rather than the general public. It may offer a more orderly route to liquidity and price discovery than one-off transfers, without the full regulatory burden of a public listing. For more detail, see our earlier article, PISCES: A Sea-Change for Scale Ups.

Why are secondaries growing in popularity?

The main driver is that private companies are taking longer to reach a full exit. Early investors and founders may want to diversify or realise some returns without selling the business entirely. Employees may hold valuable equity but have no way to turn it into cash; the controlled liquidity offered by a secondary can be very appealing to those employees and provide the company with an opportunity to re-set its employee equity pool and allocations for the next phase of growth.

Recent employee tender offers (allowing employees and existing investors to sell shares to existing shareholders and other institutional buyers) show the opportunities that secondaries can offer. London-founded ElevenLabs completed a $300 million employee tender offer in September 2026 at a $22 billion valuation. Revolut’s November 2025 employee share sale valued the business at $75 billion and marked its fifth employee liquidity programme. Wayve launched an $85 million employee tender offer in June 2026 at an $8.5 billion valuation. Smaller private companies also use targeted sales to existing shareholders or investors, often alongside a primary funding round.

What are the benefits of a secondary sale?

• Liquidity without a full exit. Shareholders can realise some or all of their investment while the company remains private.

• No dilution. A pure secondary does not increase the number of shares in issue (save to the extent employee share options are exercised in connection with the secondary).

• Talent and alignment. Giving employees a structured opportunity to sell can make equity incentives more appealing while preserving continuity of ownership and reducing pressure for a premature exit.

• Investor access. A company can introduce new institutional or sophisticated investors, diversify its shareholder base and establish a reference point for value. 

What can go wrong?

• Pricing can be contentious. Private shares are difficult to value. A discount may disappoint sellers; a high price may create unrealistic expectations for the next financing or exit.

• Not everyone can sell. Limits on eligibility or the proportion sold can create perceived winners and losers.

• Cash goes to sellers, not the business. A secondary cannot replace primary capital needed to fund growth.

• Not all employee equity plans are designed to provide liquidity on a secondary. Employee equity plans need to be carefully reviewed to confirm the secondary can create the desired liquidity. Where this was not provided for at the outset, introducing changes to a plan to accommodate secondary liquidity may have unintended tax consequences.

Concluding thoughts

Secondaries are one tool in a company’s capital and liquidity strategies, not a substitute for a full exit or primary fundraising. Used selectively, with a clear rationale and fair process, they can provide liquidity, support employee retention and broaden the investor base. Poorly designed, they can create valuation disputes, employee dissatisfaction and an unwieldy capitalisation table.