A continuation vehicle (CV) is a new fund entity formed by a general partner to acquire one or more portfolio companies from an existing fund that is approaching or past the end of its term. The transaction gives existing LPs a choice: take cash by selling their interest or roll into the new vehicle for continued exposure to the underlying assets.
Why It Matters
Fund terms are finite, but the best time to sell a portfolio company does not always align with a fund's scheduled wind-down. A continuation vehicle solves this mismatch by allowing the GP to retain and continue managing strong-performing assets rather than forcing a sale into an unfavorable market or at a suboptimal point in the company's growth trajectory.
Key Details
- The GP forms a new legal entity and transfers selected assets from the existing fund into it.
- Existing LPs elect to sell their interest for cash or roll their allocation into the new vehicle.
- Secondary buyers provide the liquidity capital that funds the cash-out for selling LPs.
- The new vehicle operates under its own terms, including a fresh investment period, fee structure, and carried interest arrangement.
- CVs are distinct from SPVs in structure and purpose. For a comparison of fund vehicles, see Funds vs. SPVs.
For a full overview, see the Continuation Vehicles guide.
This content is for informational purposes only and does not constitute legal, tax, or compliance advice. Consult qualified counsel for guidance specific to your situation. Capital Company is not a law firm and does not provide legal advice.