A   little-known Dallas investment adviser, Cogent Partners, has emerged as a key behind-the-scenes player in the financial crisis, helping colleges, foundations, rich families, and even the state of New Mexico unload their private equity holdings.

Cogent is profiting from the economic vise that is squeezing colleges, foundations, and other nonprofits. These institutions find themselves strapped for funds because a hefty slice of their endowments is tied up in private equity, which requires money to be committed for years at a time. The only way to convert these investments into cash is to sell them on what's known as the secondary market. Total secondary sales have skyrocketed from $2 billion in 2002 to at least $20 billion in 2008.

In these transactions, Cogent is a frequent intermediary. Since its inception in 2001, it has advised sellers in deals totaling $25 billion—including $4.5 billion in 2008 alone. Cogent typically charges 2 percent of the sale price as its fee.

Cogent competes in David-and-Goliath mode with UBS, the global financial services firm and the other big adviser to secondary-market sellers. Cogent handles more sales than UBS, but UBS dwarfs Cogent in market share because it tends to be involved in the biggest deals, such as a 2008 sale by California Public Employees' Retirement System of $2.1 billion in private equity.

Still, Cogent landed the nation's wealthiest university as a client. When Harvard decided to put $1.5 billion in private equity holdings on the market last fall, it chose Cogent over UBS. Harvard put Cogent on the map, though an industry insider says Harvard has sold "very, very little" so far of its private equity, because potential buyers haven't met its price.

Cogent has an unusual back story. Two of its three founders, Colin McGrady and Stephen Sloan, met as Mormon missionaries in Sapporo, Japan, before cementing their friendship as undergraduates at Brigham Young University. After business school, Sloan went to Goldman Sachs while McGrady and the third founder, Scott Myers, worked together at a fund of funds.

The trio saw an opportunity because institutional investors were paying more attention to private equity—"which had been the ultimate file and forget asset class," McGrady says—and because most secondary market deals were exclusive. In other words, each seller negotiated with only one buyer.

"The sellers were really leaving money on the table," McGrady says. Cogent redressed the imbalance by initiating two-stage auctions, with sellers culling finalists from long lists of initial bidders.

Secondary market sales are expected to rise to $30 billion in 2009 even though prices are plummeting. (Not all secondary sellers use an intermediary like Cogent or UBS; some negotiate directly with buyers.) The average high bid has dropped, from $1.04 for each $1 in asset value in 2007 to 85 cents in the first half of 2008—and 61 cents in the second half. Investments in the highly leveraged buy-out funds of recent years are drawing bids as low as 25 cents.

"There's tons of Blackstone" on the market, says Todd Miller, another Cogent managing director, alluding to The Blackstone Group, the private equity firm cofounded by Stephen A. Schwarzman. "People say, 'We don't want that.' "

"There's quite a spread between buyers and sellers in terms of price expectations," says Nigel Dawn, global co-head of the UBS private funds group. "Buyout funds are trading at 50 cents on the dollar based upon September valuations, and many sellers don't want to sell at those depressed rates."

Since the financial crisis started, Cogent has shortened auctions from two stages to one because sellers are eager to move quickly before prices fall even more. "People used to approach us because we could find them a premium bid," McGrady says. "Now they approach us because we can find them a bid."

There's no lack of bargain-hunters. According to an industry insider, Coller Capital has a $4.8 billion fund dedicated to buying private equity on the secondary market, while Goldman Sachs is closing a $5 billion fund and Lexington Partners is raising $5.5 billion.

"For them, arguably, the next two years will be the best vintages in the secondary market we've seen so far," Dawn says. "Many sellers will have to sell at deep discounts. It should be an excellent time to invest capital."