Deal structures
Direct Secondaries
Buying or selling actual shares, shareholder-to-shareholder, with no pooling vehicle in between.
A direct secondary is the simpler structure on paper: a buyer purchases shares straight from an existing shareholder and becomes the shareholder of record themselves, once the company approves the transfer. No SPV, no manager, no annual fee or carry sitting between the investor and the position.
In practice, direct secondaries are more common at larger check sizes. Companies are often reluctant to approve transfers that add many small new names to their cap table, so a seller with a sizeable position finds it easier to do a single direct deal with one buyer than to find (and get approval for) a dozen small ones.
How it works
- Buyer and seller agree a price, typically referencing the last priced round with a discount or premium applied (see valuing an illiquid stake).
- Both sides sign a stock (or SAFE/note assignment) purchase agreement.
- The company confirms no unresolved ROFR or consent issue block the transfer, and updates its cap table once funds have moved.
- The buyer becomes the direct shareholder of record — no ongoing manager, fee, or reporting layer.
Worked example
The same $240,000 purchase and 3x exit from the SPV example, but structured as a direct transfer with no manager, fee, or carry.
- Purchase price
- $240,000
- Exit value at 3x gross
- $900,000
- Fees or carry
- $0
- Net to buyer
- $900,000
- Net MOIC
- 3.75x
Why it matters: Same entry price and same exit outcome, but the direct structure keeps the full 3.75x instead of the SPV's 3.26x net — the fee-free structure is strictly better economically if you can actually access it, which is the real constraint at smaller check sizes.
Watch out for
- Direct deals put 100% of the due-diligence burden on the buyer — no manager has done any vetting on your behalf.
- You need the company's direct cooperation on cap table paperwork; a company that's slow or unresponsive can stall a direct deal for months.
- Sourcing a direct deal yourself (rather than through a marketplace) usually means an existing relationship with a shareholder — cold outreach to cap tables is rare and often against company policy.