Opacity Drives Secondary Market Discounts
Dan Akivis, senior associate at Expansion VC, on selling secondary and managing LP relationships
Opaque private companies trade at a discount because buyers are underwriting ignorance as much as business risk. In public markets, investors can read filings, track quarterly numbers, and compare management guidance over time. In private markets, many buyers get little beyond old round prices, scattered rumors, and whatever a seller can safely share. That pushes buyers to demand a wide margin of safety, which makes even strong companies hard to trade.
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The missing piece is not just execution, it is information flow. In the interview, even companies valued around $400M to $600M were described as hard to sell because buyers did not know the business well enough to make an informed decision, and management had little incentive to educate off cycle buyers.
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This is why last round price often fails as a true market price. Across 64 tender offers totaling more than $3B, 83% priced at or below the last round, and average participation was 37%, a sign that sellers often recognize the bid is too low relative to the company’s progress since the prior financing.
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The market structure amplifies the problem. Secondary liquidity is still fragmented across brokers, SPVs, platforms, and issuer controlled programs. That fragmentation weakens price discovery, because buyers and sellers are not meeting in one place with the same facts, which keeps spreads wide and transactions slow.
The direction is toward more issuer sanctioned, more repeatable liquidity with better disclosure. As companies stay private longer, they increasingly need a middle ground between silence and full public company reporting. The winners in secondaries will be the companies and platforms that turn private stock from a one off negotiation into a market with regular information, trusted buyers, and cleaner price signals.