Pricing the Unpriceable: Valuation Gaps in Private Markets

PrimaryMarkets Male

Welcome to Unlocking Liquidity, the podcast from PrimaryMarkets that brings the dynamic world of private capital to life. Each week, we dive into the trends, opportunities and challenges shaping today’s investment landscape, from emerging asset classes and market innovation through to strategies for navigating liquidity in unlisted markets. Whether you’re an experienced investor, a dealmaker, or simply curious about private markets, Unlocking Liquidity offers analysis and real-world insights to help you make sense of complexity and stay ahead of what’s next.

PrimaryMarkets Male

In listed markets, price is visible every second of the trading day. In private markets, value is far less obvious — and in 2026, that gap between perceived value and executable price has become one of the defining themes for investors. Across capital raises, secondary transactions and portfolio marks, valuation mismatches are creating both risk and opportunity.

PrimaryMarkets Male

In today’s episode, we explore why private market valuation gaps are widening, how secondary markets are becoming the new clearing mechanism for price discovery, and what wholesale and sophisticated investors should watch as liquidity strategies evolve. From growth-stage technology to infrastructure, resources and private credit, understanding how assets are truly priced has never been more important.

PrimaryMarkets Male

Private markets have long operated without the constant price transparency of listed equities, but in 2026 the challenge is no longer simply about pricing the unpriced — it is about reconciling widening valuation gaps. Across capital raises, secondary transactions and portfolio marks, discrepancies between perceived value and executable price have become more pronounced. For wholesale and sophisticated investors, understanding how and why these gaps form is critical to navigating opportunity, managing downside risk and executing liquidity strategies effectively.

PrimaryMarkets Male

Unlike public markets, where price discovery is continuous and visible, private market valuation remains episodic. It is defined at specific transaction points and inferred in between. In more stable market environments, this system functions with relative cohesion. However, in 2026, a combination of macroeconomic recalibration, shifting liquidity conditions and more disciplined capital deployment has exposed the tension between headline valuations and what buyers are actually willing to pay.

PrimaryMarkets Male

The core methodologies underpinning private market valuation have not changed. Discounted cash flow analysis, comparable company benchmarking and precedent transactions remain the primary tools through which value is assessed. What has changed is the degree of divergence between these methods and real-world pricing outcomes.

PrimaryMarkets Male

Discounted cash flow models continue to provide a theoretical anchor, particularly for mature businesses. However, higher discount rates and more conservative growth assumptions reflecting a “higher for longer” interest rate environment have materially compressed implied valuations. At the same time, comparable company analysis has become more complex. Public market multiples, particularly in growth sectors such as technology, have reset from their peaks, yet many private companies continue to reference historical benchmarks established in stronger markets.

PrimaryMarkets Male

Precedent transactions, once a reliable guide, are also less consistent. Deals completed in 2021 or 2022 often bear little resemblance to current pricing conditions. As a result, valuation frameworks that once converged are now producing a wider range of outcomes, contributing to the valuation gaps observed across the market.

PrimaryMarkets Male

Valuation gaps in 2026 are not driven by a single factor but by the interaction of several forces. Sellers, particularly those anchored to prior funding rounds, may be reluctant to accept lower valuations that imply a step-down. Buyers, by contrast, are increasingly disciplined, pricing in risk, illiquidity and uncertainty with greater precision.

PrimaryMarkets Male

This divergence is most visible in growth-stage companies, where future expectations account for a significant portion of value. In these cases, even small adjustments to assumptions around revenue growth, margin expansion or capital efficiency can lead to substantial differences in valuation.

PrimaryMarkets Male

Liquidity conditions further amplify these gaps. With fewer large-scale liquidity events and a more selective IPO market, investors are holding assets for longer. This has increased the importance of secondary markets as a mechanism for price discovery, but it has also introduced more variability in pricing outcomes.

PrimaryMarkets Male

Discounts have always been a feature of private market investing, but in 2026 they have become a primary tool for reconciling valuation differences. Liquidity discounts, in particular, have expanded as investors demand compensation for longer holding periods and uncertain exit pathways.

PrimaryMarkets Male

Minority discounts and control premiums continue to shape transaction dynamics, but their application has become more nuanced. Buyers are increasingly focused on governance rights, information access and alignment with management, all of which influence how these adjustments are applied.

PrimaryMarkets Male

Importantly, discounts are no longer viewed purely as a function of asset quality. They are increasingly a reflection of market structure — specifically, the balance between supply and demand for liquidity. In situations where sellers are motivated, whether due to portfolio rebalancing, fund lifecycle considerations or personal liquidity needs, discounts can widen significantly.

PrimaryMarkets Male

If primary markets establish valuation narratives, secondary markets in 2026 are where those narratives are tested. Secondary transactions have become the most reliable indicator of executable value, providing a real-time lens on how assets are being priced by informed participants.

PrimaryMarkets Male

Structured secondary trading environments have played a key role in this evolution. By enabling issuer-led liquidity events, defined trading windows and controlled participation, these platforms create a framework within which price discovery can occur more efficiently.

PrimaryMarkets Male

In the Australian context, this has been particularly evident in sectors such as technology, private credit and renewable energy. Secondary transactions in high-growth companies have frequently occurred at discounts to prior funding rounds, reflecting a broader global repricing. At the same time, assets with stable cash flows such as infrastructure or income-generating funds have demonstrated more resilient pricing, with narrower bid-ask spreads.

PrimaryMarkets Male

These dynamics highlight an important point: valuation gaps are not uniform across the market. They vary by sector, asset quality and liquidity profile, reinforcing the need for investors to adopt a nuanced approach.

PrimaryMarkets Male

In an environment defined by valuation gaps, negotiation becomes even more central to the pricing process. Transactions are increasingly characterised by a need to bridge differing expectations, often requiring creative structuring and a willingness to engage in iterative dialogue.

PrimaryMarkets Male

Timing remains a critical factor. Sellers with flexibility can afford to wait for more favourable conditions, while those with immediate liquidity needs may need to accept pricing concessions. Buyers, meanwhile, must balance the desire for attractive entry points with the risk of missing high-quality opportunities.

PrimaryMarkets Male

Deal structures are frequently used to close valuation gaps. Earn-outs, performance-based milestones and hybrid securities allow parties to align on long-term value while managing short-term uncertainty. These mechanisms are particularly relevant in the Australian mid-market, where differing views on future performance are common.

PrimaryMarkets Male

Australia’s private market ecosystem brings its own set of dynamics to the valuation discussion. The presence of large superannuation funds continues to provide a significant pool of capital, supporting demand for high-quality assets. However, these investors are also increasingly disciplined, with a strong focus on valuation integrity and risk-adjusted returns.

PrimaryMarkets Male

The relatively concentrated nature of the Australian market also means that information flows and relationships can influence pricing outcomes. Access to high-quality deal flow and proprietary insights can provide a meaningful advantage in identifying and navigating valuation gaps.

PrimaryMarkets Male

Sector-specific considerations remain important. In resources, valuation is often tied to commodity cycles and technical milestones, while in technology, growth metrics and scalability continue to dominate. In both cases, the interplay between global trends and local market conditions shapes how valuation gaps emerge and evolve.

PrimaryMarkets Male

One of the defining trends of 2026 is the move toward more structured approaches to price discovery. Issuer-led liquidity solutions, including trading hubs and controlled secondary markets, are introducing greater frequency and transparency into the valuation process.

PrimaryMarkets Male

These mechanisms allow companies to facilitate liquidity without relinquishing control, while providing investors with clearer pricing signals. Over time, this is expected to reduce the magnitude of valuation gaps, although it is unlikely to eliminate them entirely.

PrimaryMarkets Male

For platforms such as PrimaryMarkets, this represents a significant opportunity. By enabling structured interactions between buyers and sellers, and by providing visibility over transaction dynamics, these platforms are helping to bring greater coherence to private market pricing.

PrimaryMarkets Male

For wholesale and sophisticated investors, valuation gaps are not simply a challenge — they are a source of opportunity. The ability to identify where market perception diverges from intrinsic value is a key driver of returns in private markets.

PrimaryMarkets Male

However, capturing this opportunity requires a disciplined approach. Investors must be comfortable operating within a range of valuations, rather than relying on a single point estimate. They must also be prepared to engage actively in negotiation, structuring and portfolio management.

PrimaryMarkets Male

Secondary markets and structured liquidity mechanisms provide additional tools for managing exposure. Rather than being passive holders of illiquid assets, investors can take a more dynamic approach, responding to pricing signals and adjusting positions as conditions evolve.

PrimaryMarkets Male

In 2026, the challenge is no longer simply about assigning a value to private assets. It is about understanding and navigating the gaps between different views of that value. These gaps are a natural consequence of a market that is less liquid, less transparent and more reliant on judgement than its public counterpart.

PrimaryMarkets Male

Yet they also represent the essence of private market investing. For those with the expertise and access to operate effectively, valuation gaps create the potential for differentiated returns. They reward insight, patience and the ability to structure transactions that align interests across participants.

PrimaryMarkets Male

In this context, “pricing the unpriceable” becomes less about solving a puzzle and more about managing a process. It is a process that is increasingly structured, increasingly data-informed and, through platforms facilitating capital raising and secondary trading, increasingly accessible to sophisticated investors seeking to engage with private markets on more informed terms.

PrimaryMarkets Male

For companies and managed funds that are not listed on a stock exchange, the PrimaryMarkets trading Platform is an ideal way to facilitate the off-market sale of shares in your company and units in managed funds.

PrimaryMarkets Male

PrimaryMarkets is a flexible and evolving Platform that responds in real time to an ever-changing investment environment. In doing so, it provides sophisticated investors with access to companies that are shaping the future in a wide variety of industries and sectors. We provide access to opportunities previously only accessible to institutional investors. In addition to trading, PrimaryMarkets helps companies raise capital from our global investor database.

PrimaryMarkets Male

PrimaryMarkets exemplifies how innovation can transform the way we invest, trade and raise capital by breaking down traditional barriers, providing liquidity solutions and promoting transparency.

PrimaryMarkets Male

As the Platform continues to grow and evolve, it promises to unlock even more opportunities for investors and companies shaping the future of economies.

PrimaryMarkets Male

And that brings us to the end of this episode of Unlocking Liquidity. Thanks for spending your time with us, we hope today’s conversation gave you a fresh perspective on private markets and how liquidity is evolving. If you enjoyed the episode, please follow or subscribe wherever you listen, and feel free to share it with someone who’d get value from it. For more insights, opportunities and episodes, visit PrimaryMarkets.com. Until next time, thanks for listening, and we’ll see you in the next conversation.