A secondary LBO (or secondary buyout) is a transaction in which a private equity fund acquires a company already owned by another private equity fund, as opposed to a primary LBO (acquisition from a founder, family or corporate). Secondary LBOs represent a growing share of the European buyout market. For the selling fund, it provides a clean exit at market price; for the buying fund, it acquires a professionally managed company with a documented performance track record. Valuation methodology is identical to primary LBOs, but may justify a modest premium reflecting lower operational uncertainty.

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Example: a Swiss PE fund that has held an industrial SME for 5 years sells to a secondary buyout fund at CHF 45.0 million (8.5x EBITDA) — slightly above primary market levels (7.5x) to reflect the quality of the installed management team and documented performance history. The secondary financing structure comprises CHF 22.0 million senior debt and CHF 10.0 million equity from the new fund.

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Hectelion supports both selling and acquiring funds in secondary LBO transactions — providing rapid target valuation, due diligence and financing structuring.