Private equity investors like to boast that their deal-flow is proprietary because it suggests an overlooked investment and an opportunity to add value. It follows that when a private equity firm buys an asset from an other private equity firm it’s likely that the opportunity to create value is substantially reduced.
For this reason the number of secondary deals in any given period can be an interesting indicator. Per an article in the FT:
“Last year, the industry did a record 576 so-called secondary deals, when a company or a stake in a company is sold by one private equity firm to another, according to Preqin, the data provider. That compares with 394 such transactions in the peak of the deal boom in 2007, just before the financial crisis.”