The Discount Is the Wrong Question in Private Equity Secondaries

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

Everyone asks the same first question in a secondaries deal: what's the discount. Richard Chow, a partner at PJT Partners who has sat on every side of this market as an LP, a buyer, a portfolio manager at Abu Dhabi's sovereign wealth fund, and now an advisor, says that question misses the point.

Chow traces how secondary market volume grew from roughly $10 billion a year in the early 2000s to more than $250 billion today, and lays out what a buyer should actually underwrite instead: the buyer's own cost of capital, how much upside is left in the asset, and where the proceeds go next. He also breaks down how managers mismarket IRR to retail investors using day-one discount math, and the SpaceX valuation call that taught him secondary buyers can rarely see past two years.

Chow's advice holds outside secondaries too: don't anchor a decision on one number and skip the strategic picture. DealRoom's Buyer-Led M&A™ framework gives corporate development teams a structured way to drive strategy, alignment, and value creation from day one instead of reacting deal by deal. See the five pillars: Link here.