One number — $3.2 trillion — goes a long way toward explaining why secondary funds raised 92 percent more capital in 2023 than they did in 2022 (albeit from a very small base).

That’s the unrealized value represented by the 28,000 unsold companies weighing down buyout portfolios globally, more than 40 percent of which are four years old or older.

This backlog is massive by historical standards — four times by value what it was during the global financial crisis — and a flash point in the liquidity crunch plaguing private capital markets broadly. With exit markets dormant across the alternatives industry, funds of all kinds are badly in need of ways to get cash back to investors and keep the private capital flywheel spinning.

Enter secondaries, a catchall term for investment vehicles that help general partners (GPs) and limited partners (LPs) sell or restructure private capital holdings to generate liquidity. While the asset class is small, it is growin