PE GP-Stake Sales Surge: Liquidity Windfall Coupled With Governance & Valuation Risks

In response to recent market headwinds—characterized by slow exit timelines, high interest rates, and tightening LP patience—private-equity firms are increasingly opting to monetize parts of their management companies via GP-stake sales. According to Dechert’s survey, 77% of PE fund managers plan to sell such stakes in the next two years, reflecting a doubling of intent compared to one year prior.

Through October 2025, GP-stake transactions had already totaled about US$3.5 billion, on course to surpass the previous high of US$3.6 billion in 2015. Key firms such as Blue Owl Capital, Blackstone, Hunter Point Capital, and Goldman Sachs’ Petershill Partners are among the primary actors in this space.

The strategic motivations are multifaceted. Primarily, GPs are confronting a backlog of portfolio companies yet to exit—which in many sectors have remained unsold for longer than typical holding periods—just as LPs increasingly demand liquidity and returns. GP-stakes provide an alternative to traditional exits (IPOs or M&A), enabling firms to raise cash without divesting core holdings. Additional needs prompting GP-stake sales include funding new GP commitments (i.e. GPs investing their own capital in funds), cashing out senior or retiring partners, and expanding into new business lines.

However, this route carries trade-offs. Selling ownership in the GP reduces control and profit participation for the original general partners; it also potentially sets up conflicts with outside investors now sharing in fee income or decision rights. Moreover, given the complex valuation and due diligence demands, GP-stake deals tend to favor large, top-tier firms, which have established brand, scale, and consistent performance. Mid-tier firms may struggle to attract buyers or command favorable terms.

Another concern is whether the market can sustain the volume—both in terms of buyer appetite and LPs’ tolerance for diluted GP governance. There may also be regulatory or structural pushback if fee streams and carry are shared externally, or if GP-stakes become so common that they affect alignment dynamics. Finally, surplus supply in GP-stake offerings may lead to valuation compression or longer sales cycles, especially during periods of economic uncertainty.

Strategic implications include GPs needing to assess whether to build scale and performance credibility now, before attempting GP-stake offerings. This might favor those who have maintained strong track records and consistent fee and carry revenue. LPs and secondary investors must scrutinize GP-stake deals more carefully to ensure alignment and protect economic interests. For firms without a strong performance record, pursuing other forms of liquidity—continuation funds, NAV financing, or secondary sales of fund stakes—might be more viable.

Open questions moving forward include: how GP-stake deal terms evolve—especially around governance and profit participation; how many firms will follow through on intentions versus those deterred by weak metrics or lack of interest; potential impacts on fundraising (will future LPs demand lower carried interest or GP commitments?); and whether this trend reshapes competitive dynamics among PE firms, elevating scale and reputation in bidder selection.