Mike Custar, Managing Director, Private Capital Advisory at William Blair, shared his insights on the secondary market in a fireside chat. He discussed the evolution of the market, his role in advising General Partners (GPs) and Limited Partners (LPs), and the growth opportunities in the industry.

Key topics discussed include:

Market Evolution: The secondary market has evolved, with buyers gaining comfort with concentration risk, leading to single-asset continuation fund transactions and larger, more concentrated deals.

Deal Flow: William Blair’s transaction flow comes from various sources, including its M&A network, fund placement team, and personal relationships.

Assessing Opportunities: Custar assesses deals based on the GP’s narrative, LP needs, and market demand. He emphasizes the importance of understanding the GP’s objectives and LP relationships.

Skills and Team: Custar believes a great banker needs a good attitude, strong work ethic, intuition, and pattern recognition skills. Technology will play a role in the LP portfolio sale side, but human interaction remains crucial.

Relationships: Custar stresses the importance of relationships between GPs, LPs, and advisors. Trust and a deep understanding of each other’s needs are essential for successful transactions.

Growth Opportunities: Custar sees opportunities in the lower middle market, where smaller GPs are more likely to engage in secondary transactions. He also expects the credit market to develop as buyers enter the market.

Key timestamps:

00:09: Introduction
00:38: Mike Custar’s Role and Background
01:16: Evolution of the Secondary Market
01:59: Milestones in the Market
03:02: Market Momentum and Deal Flow
03:31: Transaction Origination and Deal Flow
04:39: Deal Flow Sources
05:48: Emergence of New Business Areas
06:08: Assessing the Right Timing and Structure
06:55: Motivations for Continuation Fund Transactions
07:41: Correlation with the Exit Market
08:57: Future of the Secondary Market
09:30: Creating the Right Narrative
10:37: Assessing GP’s Objectives
12:05: Skills for the Team
13:08: Differentiating a Great Banker
13:39: Role of Technology
14:42: Impact of Technology on the Market
15:00: Importance of Relationships
17:09: Shift in Transaction Size
17:32: Opportunities in the Lower Middle Market
19:24: Approach to GP Relationships
19:43: Deal Flow Management
20:20: Balancing Existing and New Relationships
21:43: Focus on LP Stake Sales
22:34: Formation of a New Advisory Firm
23:51: Importance of Banking Relationship
25:42: Career Perspective