LP optionality: a feature, not a footnote
For LPs, continuation vehicles offer flexibility that traditional exit routes do not. Rather than waiting for uncertain IPO or M&A markets, LPs can choose to exit for immediate liquidity, roll into the new vehicle and maintain exposure, or in some cases, increase their position. This optionality is particularly valuable in a DPI-constrained environment.
Process hygiene remains critical to LP confidence. Competitive price discovery, proper disclosure of conflicts of interest, and access to independent LPAC oversight are table stakes. LP attitudes have evolved considerably as the instrument has matured, but ensuring that roll terms are genuinely status quo, no less favourable than the original fund, remains an area where standards across the market are still developing. LPs are also increasingly adapting their internal processes to act on the optionality CVs provide, something that was not always possible in earlier iterations of the market.
“As long as the transaction is structured fairly and LPs get appropriate options, it’s viewed as a very good addition to the market — but those elements need to be in place.”
Nigel Dawn
Global Head of Private Capital Advisory, Evercore
00:00:05 – 00:00:12
The questions that came out of the LP base when we decided to do our CV, were three primary questions.
00:00:12 – 00:00:15
One was due process.
00:00:15 – 00:00:26
Did you have the right process hygiene? Have you worked with an advisor? Have you created market discovery and price discovery for this asset in an appropriate way?
00:00:26 – 00:00:35
The second question was really around of course the company itself that we were looking to raise the CV for.
00:00:35 – 00:00:39
Is the business healthy? Is it in a healthy market with enduring trends?
00:00:39 – 00:00:51
And third, which is related to that and perhaps the most important, is really what’s the plan during the next phase of ownership for the business?
00:00:51 – 00:00:57
And how is Advent going to continue to be a value-added sort of transformational partner for the company?
