A continuation vehicle is a new fund entity that acquires one or more portfolio companies from an existing fund. The structure allows continued management of strong-performing assets beyond the original fund's term while giving existing LPs a choice: take cash at a market price or roll their interest into the new vehicle.
Most continuation vehicles are GP-led secondary transactions, where the GP identifies the opportunity and runs the process. LPs can also initiate the conversation, particularly when they see value in an asset but recognize the fund is nearing its term. In either case, the assets move to a new vehicle, and new capital from secondary buyers provides liquidity for LPs who want to exit.
Key characteristics:
- Typically GP-led. The GP usually identifies which assets to transfer and runs the transaction process, though LPs sometimes initiate
- LP election. Existing LPs choose whether to sell for cash, roll into the new vehicle, or (where available) do a partial election
- New capital. Secondary buyers invest alongside rolling LPs, providing liquidity for those who elect to sell
- Flexible scope. The structure works for single-asset and multi-asset transactions across venture capital and private equity funds
For a full overview of how continuation vehicles work, including timeline, parties involved, and LP considerations, see the Continuation Vehicles guide.
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