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Jon Madorsky

lines on the record: 74
first: 2025-05-29
most recent: 2025-05-29
sittings or episodes: 1
sources: podcast

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“Maybe I could create a framework of how I think of the secondary players sitting today. In my mind, it's a three-dimensional rubric. On one axis would be deal sizes. For example, RCP, we focus on very small deals, 10 million to 50 million dollars in size on the very biggest end would be Lexington and Colorado. Their transactions are very big. Another axis would be style. We focus solely on North American lower middle market buyout. You have some managers focusing only on venture, some managers focusing only on credit, some managers that have a global footprint. Those are all differentiators in the market today. And then the last dimension of this would be how the managers believe they're creating value. So for our RCP, we feel like because we've a very big primary business, our relationships and information give us an”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is it to continue to invest in private equity to get diversification of vintage years? Or is it to just drive liquidity for other uses is something that we don't have the transparency in, but the distress selling market, I think, is not something we see very often. I would call it a strategic selling market”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“The construct that the secondary market is only for forced liquidity or distressed sellers is probably an antiquated idea. Probably idea that was really rooted in the global financial crisis. In today's world, the majority of the volume that we see is probably executed around portfolio construction. And there's a lot of reasons to sell. Sometimes managers are overallocated to private equity. Limited partners are overallocated to private equity. Limited partners are overallocated to specific managers. LPs have change of leadership and as a result, they want to sort of have their imprint on the portfolio. So most of the volume we see is almost strategic and not distressed. We are giving them liquidity and what they're going to do with that liquidity, the limited partners, is a strategic decision.”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Liquidity coming out with less realizations occurring people are over-indexed in private equity, or they have too big a positions in certain managers. So they're using the secondary market to drive value. If we establish a market that feels fair, then people will sell into this fair market when they need liquidity. If we establish a market that feels unfair, then they'll hold on and they'll just suffer through this lack of liquidity environment that they might be suffering through.”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Secondary market is the tool to provide that liquidity. We see a manifesting two ways. On the GPLED side, we have an incremental transparent perspective on Amount of failed transactions that occurred in 2022 and 23, primary managers trying to sell their assets was astonishing. Effectively, unless there was a perfect asset, it wasn't going to trade. Or they could go to the secondary market. And so many of the deals that we see in the secondary market is a little bit of noise on them. Maybe that's why they're not pricing at a premium like the open market might not get or collect, but that's the fair value. So GP is using the secondary market as a tool to get liquidity because in one ear, the limited partners are saying we want maximum value. In the other year, they're screaming, we want liquidity. So GPs are recognizing this is a great opportunity for us to do a GP-led and give the liquidity that LPs are screaming for. On the limited partner side of the secondary market, with less”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Was looking at an industry report and the survey was how many people have not used the secondary market historically. That number keeps shrinking every year. So although we see in the market that Yale and Harvard are selling, this is not their first sale. It's just actually a return to them selling a different way to think about it is how much more volume will they sell? How often will they come back to market to sell? The secondary market started as a market for liquidity. And in today's world, liquidity is harder and harder to obtain. So we're seeing limited partners come back in a quicker and quicker way. On the demand side, there's a lot of demand for those limited partnership positions. So the sellers feel like they're going to get a fair price.”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Very recently, we've had these announcements of some of the longest standing LPs putting big portfolios up for secondaries, most notably Yale and Harvard. How do you think about that as a potential next inflection in the history of what might come in the industry?”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Into the market. I think when that capital comes into the market, there's pressure on those managers to invest it quickly. So therefore secondaries is a natural avenue for that. I think a natural question is, well, that was a great history of the last 25 years. Where do you think it's going to go?”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“The volume was LP transactions. Juxtaposed that versus 2010, it was all LP transactions. And it fundamentally changed the way that the market approached secondaries. The next thing that happened was COVID. And in COVID, managers realized that they would need more time on their portfolios. So we renamed GPLEDs and started calling them continuation funds. Same mechanics, same structure, same assets, but we just changed the name because that was how they were going to behave. This is when GPs needed a little bit more time. We needed the COVID metrics to flow through the financials. And nothing was really selling in 2019 or 20. I think the next major milestone is really 24 with these 40-act funds or a lot of the retail capital flowing.”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Beginning in 2012 and 13, there were some early deals and the language they would use would be like zombie funds or GP restructurings. Those were largely tougher assets or tougher manager quality. And that continued largely, but in a very small percentage through 2017. For me, there was a watershed moment when one of our best GPs decided to do a GP-led transaction. And immediately the market changed the name of a restructuring to a recapitalization. Recapitalization has all those positive connotations versus a restructuring, which has the negative connotation. The market shifted wholesale in 2017, 2018, and you can see that with the volume. By 2020, about half the volume was GP-led transactions and half”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“At what point in time did the transactions move from LPLED, an LP needing liquidity, to the GPs using it as a technology that was useful for them to say wrap up a fun life or what's to become with continuation vehicles?”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“We were looking for two key attributes. One was going to be secondary capabilities, transaction capabilities, and the other piece was knowledge of our market because our lower middle market space is very unique. My partners tapped me and said, you should think about doing this. So this is when I joined the secondary landscape. And I feel really fortunate because it's grown exponentially since then. So $20 billion in 2010, 170 or $80 billion in 2024. We went from a cottage industry, took a professionalized or at least acknowledged industry in 2010. The next major point that I think is important is when people started identifying leverage in the market, specifically asset-based leverage to buy portfolios and put a loan on those specific portfolios. This was in the 2014-15 time.”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“The point of maturation almost immaculate conception was global financial crisis. In 2010, everybody awoke to the fact that private equity positions could be sold. When you look at the 2010 volume, it was right around $20 billion. So let's mark our growth of the industry with the volume size. A lot of LPs recognized this is a market that they can use to get liquidity. It was at that point still very much of a distressed market, distress sellers. But also a lot of entrants sort of moved into the market and we were one of them. GPs went from we've never had a secondary in our portfolio to will you help us out and buy this secondary position from this limited partner. It was a real eye-opening opportunity. For me, it was a real career inflection point. We went out and thought about hiring somebody to be the portfolio manager.”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Was not a mark to market valuation methodology universally adopted. The NAV, the value of the position, was the lower of cost or market. Lower of the cost of market. The FASB rule of 157 drove to a more marked to market situation. At that point, 2006, that's when secondary buyers would have to price the positions because there was a real market value to them.”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Was difficult. There were two elements to that question one is how do they find them? And then secondly, how did they even know what these assets were worth? In terms of finding them the landscape of limited partners was so much smaller. If you think about the total amount of NAV, the total number of investors in the space, it was still a very cottage industry in 1995 or 2000 KKR's fund might have been a billion dollars. I'm going to be wrong in that number, but it's at least directionally accurate. So it just speaks to the fact that the market was small within the market. There was like known pockets. And I think that's the way a lot of people were finding the transactions. The other piece of it was that prior to 2007,”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Until it had full liquidity. And there was no exit out. The secondary market was really birthed in 1990. You had two managers, collar and lex 90 and 93. And they were started because you had the 87 crash and then the early 90s recession. So people needed and wanted to sell their private equity positions. And they were buying limited partnership interest, but it was still very much a cottage industry. And there was not really intermediation in it. It was a market that was very much underground. We didn't see any of those transactions occurring. GPs would use as secondary as almost like a scarlet letter to think that something's wrong with their portfolio. This real largely continued probably until let's”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our first office, two of my partners shared the conference room as their office, and I had a cube outside. It was tiny. Being entrepreneurial and being lucky and us being complimentary and successful allowed us to build a really big organization today, I have to take a step back and be really grateful with the fact that we built one of the largest managers focused on North American lower middle market buyouts. Pretty wild. A lot of your focus been in secondary space. And I'd love you to take me through over the last two decades how it's evolved to where we are today. Yeah, it's a good question from somebody else as a history major. Let's start at the beginning of private equity in the early 90s when you had no secondary players at all. And a limited partner that would invest in a private equity firm was in that manager.”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Business school, and I've been at the same job since I graduated business school 21 years. It's pretty amazing. I think that duration is rooted in that entrepreneurial spirit. I joined RCP when they were raising their first fund. We had $86 million under management, which in Fund to Fund construct is very, very small.”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Something on a smaller basis and not as institutional. When I was in college, my parents didn't push me to do anything. They just said follow what you like. And I graduated a history major, which is a funny degree to have. But the reality is you can spin it into saying it's the foundation for making all investments. As a history major, we take a primary hypothesis and we use primary and secondary information to validate that hypothesis. Ted, that sounds a lot like investment. So there I was. I was a history major and I started working in strategy consulting at PricewaterhouseCoopers largely because I didn't really get a deep level of mentorship to know what I wanted to do. I just took a job and off I went. My dad's a doctor. So he just said don't be a doctor. After I left PricewaterhouseCoopers, I did an entrepreneurial startup and then I went to”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Man goes down and then walk them to the natural food store and sell them. An entrepreneurial spirit has always been embedded in my system. That same entrepreneurial voyage for me continued When I got too old to be a mangrove salesman, I started walking dogs. And I sell a business card in one of our bathrooms that says, walk in John's pet services. It's a dollar a walk. And then I started sea dogs with one of my good friends and we would wash boats. So before I had even graduated high school, I had all of this little side hustle, but all very Miami. Boat washing, mangoes, everything in between. It was a really unique place to be and it's still very much part of my soul. As you went through your education, how did you think about that in the context of either the business world or where you would go after college? I always assumed and thought I would go into something entrepreneurial. Today, if you say, John, are you in an entrepreneurial environment in finance? I would say 100%. Absolutely. But entrepreneurism today takes a different look and shape. Back then it was just doing.”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“And on our site at Capitolocators.com. Thanks so much for spreading the word about our head of content job opening. Enjoy my conversation with John Medors John, great to see you. Thank you very much for having me. I would love you to take me back to your growing up eventually leading into being in this business. Yeah, I grew up in Miami, Florida, which is a very different animal. It's a melting pot of many different cultures from a community-wise in the 80s. Miami was a very interesting place to be. And then lastly, as I was up and coming pre-teen being in that space gave me a lot of interesting opportunities that I wouldn't have had it elsewhere. So I was thinking one of your questions, what was your first job? We lived in what was then a fairly rural area of Miami today. It's the center of it, but it was an old mangrove farm. It was just partialed out and our house just happened to be on one of the acres of the mangrove farm. We had, let's call it, eight or ten trees. It was a seven or eight-year-old. I would cut.”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Growth, risks, and the future of the industry. Before we get to the interview, we're excited to share a new opportunity to join the capital allocators team. We're hiring ahead of content to lead everything we create and share with you. Our listeners and followers. That includes our flagship podcasts, our newsletters, and written content, our website and social channels, and our new video content. We're looking for someone who's excited to roll up their sleeves, get into the weeds, and own our content processes from start to finish. Most importantly, we're looking for a fan of the show, someone who's jazzed about long-form interviews with leaders in the institutional investment industry, someone who brings energy, pride, and a sense of purpose to our mission of compounding knowledge and relationships among asset owners and investment managers. This person should be detail-oriented, organized, experienced in project management, and ideally have a background in media or podcast production. The job posting is in the show notes.”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“My guest on today's sponsored insight is John Medorsky, managing partner and co-portfolio manager of the secondary strategy at RCP Advisors, one of the largest managers focused exclusively on North American lower middle market buyouts. John joined the firm 21 years ago and has participated in the growth of the secondaries business from its earliest stages. His partner, Alex Abell, joined me on the show last year, and that conversation is replayed in the feed. Our conversation covers the history and maturation of the secondaries market from a redheaded stepchild to a modern portfolio tool. We discuss the use cases, transaction types, and capital sources in secondaries. RCP's investment strategy levers of value creation, portfolio construction, and exit strategy. John also shares his perspective on secondary market pricing,”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source
“Hello, I'm Ted Sides, and this is Capital Allocators. This show is an open exploration of the people and process behind capital allocation through conversations with leaders in the money game, we learn how these holders of the keys to the kingdom allocate their time and their capital. You can join our mailing list and access premium content at capital allocators.com.”
2025-05-29 · Capital Allocators · Jon Madorsky – Navigating the Evolution of Private Equity Secondaries (EP.448) · IDENTIFIED FROM THE TRANSCRIPT · source