Catching the next wave
General partners tout continuation vehicles as a neat way of extending the value creation runway for some of their best-performing companies while offering their investors a liquidity option. So what does academic research tell us about who completes these transactions, which assets they involve, and the extent to which limited partners sell or reinvest in these structures.
By Vicky Meek
Once a small corner of the secondaries market, continuation vehicles (CVs) are now an established feature of private markets. Over the past few years, general partner-led deals have accounted for around half of all secondary transaction volume, up from less than a quarter in 2017, Jefferies figures show. In 2025, GP-led volume reached its highest ever yearly total at US$115bn, of which 89% came from CVs.
Many in the market would point to the “win-win-win” that these transactions can be for GPs, their existing limited partners and new investors. The industry’s narrative has been that CVs offer GPs the chance to hold on to some of their best-performing companies so that they can create further value as opposed to selling, potentially to competitors. At the same time, these structures are designed to offer existing LPs the opportunity to take capital off the table or to reinvest it in the new vehicle. Yet CVs have their detractors, with some suggesting that GP claims of high-quality companies don’t always match the reality and others pointing to conflicts of interest as managers are both buyers and sellers of the same assets.
We had expected to find, given the prevailing narrative around CVs, that the performance of the assets transferred would be high. But it really looks as though these are often stellar assets – we were surprised how strong the effect was.
Leon Luepertz, Rotterdam School of Management, Erasmus University
‘From Exit to Extension: The Rise of Continuation Vehicles in Private Equity‘ by Leon Luepertz, Peter Roosenboom and Marno Verbeek (all of Rotterdam School of Management, Erasmus University) examines the characteristics of rapidly growing CV secondary transaction types.
It uses a dataset of 199 CV transactions managed by 162 GPs, completed between 2014 and 2024 and involving 352 underlying assets with an aggregate value of nearly US$120bn. The authors find that more established GPs — measured by larger AUM, higher fund sequence numbers and larger fund sizes — tend to launch CVs. They also find that both the legacy funds from which these transactions are launched and the GPs’ predecessor fund have significantly stronger average and median net total value to paid-in capital (TVPI) than funds without CVs.
The assets transferred also appear to be of high quality, according to the research: realised returns at the point of sale to CVs have a median gross TVPI of 3.5x and a median gross IRR of 36.3%. Single-asset CVs lead the pack, with a median TVPI of 3.7x and 46.9% IRR; multi-asset CVs have a median TVPI of 2.7x and 25.4% IRR.
The study’s analysis of early performance data also suggests that the price of liquidity for an LP depends on the characteristics of a transaction: more complex CVs or those launched later in a fund’s life show higher discounts to the reported net asset value than single-asset or younger assets.
Finally, the researchers find that, despite lower headline management fees for CVs, the larger size of CVs relative to legacy funds allows GPs to extend the fee economics materially, which presents a conflict of interest — yet GPs often adopt tiered carried-interest structures in CVs and seem to roll a significant portion of their carry to strengthen alignment with incoming LPs.
‘Selling to Yourself: Continuation Funds in Private Equity‘ is by Rustam Abuzov (University of Virginia, Darden School of Business), Will Gornall (The University of British Columbia, Sauder School of Business), Sophie Shive (University of Notre Dame, Mendoza College of Business), Ilya A. Strebulaev (Stanford University, Graduate School of Business) and Michael S. Weisbach (The Ohio State University, Fisher College of Business). Using a dataset of 472 CVs, it also examines CV characteristics and studies LP commitment decisions.
In common with the other paper, this research finds that larger, better performing funds with stronger interim performance measures are more likely to launch CVs than others. It also finds that larger assets relative to the rest of the fund are more likely to be transferred to a CV, but that financial metrics, such as revenue, profitability, and estimated value, appear to have no bearing.
The study finds that, when given the opportunity, LPs opt to roll their investment into a CV only 5.7% of the time, they are less likely to roll into single asset than multi-asset CVs, and that, when given longer timeframes to make their decisions, they are more likely to roll. This paper provides some preliminary evidence on performance: On average, CVs report a higher net IRR (23.9%) than their corresponding legacy funds (19.3%), but a lower net multiple (1.59x versus 2x).
