We’ve written a lot about the bid-ask gap in private equity secondaries, and whether buyers or sellers will be first to blink. Buyers have said it will be sellers and sellers have said it will be buyers (save for the most distressed sellers, who already took their haircuts and moved on).
But Troy Barnett of Adams Street Partners (a buyer) may have spoken truth to peers today at the PEA Outlook conference, in reference to a proposed secondary sale by Stanford University, which received bids of 80 cents on the dollar:
“The Stanford transaction forced secondary buyers to reevaluate their line in the sand.”
In other words, buyers blinked.
The pendulum may swing back if the secondary market is flooded with bank-sponsored assets — due to the Volcker/Obama proposals — but, for now, sellers have the power (at least those sellers whose portfolios don’t feature much leverage).
What I’ll never understand is why more secondary market buyers didn’t see this coming, and split the difference while there was still time….