Continuation Vehicles and GP-Led Secondaries Explained

Introduction

Most sponsors with 2021-2022 take-privates are not exiting their portfolio at all. They are recapitalizing it, rolling the asset into a new fund they raise themselves, and resetting the hold period at a market-clearing price set by the secondaries-buyer market. The mechanism is called a continuation vehicle, and 2025 was the year the volume made it impossible to call it niche. GP-led secondaries hit roughly $116 billion in 2025 (up from $15 billion in 2021), with a record 147 continuation-fund exits, per the Jefferies and Evercore market reviews; GP-led is now close to half of total secondaries volume, up from 14 percent in 2023.

The reference single-asset CV is Belron, the deal that established the structure at scale. In December 2021, Clayton Dubilier & Rice sold its stake in Belron (the parent of Safelite AutoGlass and Carglass) in a two-part transaction that valued the company at €21 billion. Roughly 39 percent of the position was sold to a secondary buyer syndicate led by Hellman & Friedman, GIC, and BlackRock Private Equity Partners. The remaining 61 percent did not leave CD&R's hands at all: it was sold from CD&R Fund X into a brand-new vehicle called CD&R Value Building Partners I, L.P., a single-asset continuation fund CD&R itself raised to keep operating the asset through the next phase of its hold period. €21 billion was a step-change in SACV scale at the time and remains the precedent the 2025-2026 market has built on.

For the demand-side driver behind the explosion (the SaaS valuation reset and the broader 2021-2022 take-private cohort stuck at entry multiples) and the GP economics CVs reset and roll forward (the carried interest explainer), see the companion posts.

The cleanest way to understand a continuation vehicle is by contrast with a traditional exit. In a traditional exit, a sponsor sells the portfolio company to a strategic acquirer, a sponsor-to-sponsor secondary buyer, or to the public market via an IPO. The proceeds are distributed to the original fund's LPs as a realized return; the GP crystallizes its carry on the deal; the position closes. In a continuation vehicle, the sponsor does not exit the asset at all. Instead, the sponsor raises a new fund (the CV) that buys the asset out of the original fund at a market-clearing price determined by an independent secondaries-buyer process.

Continuation Vehicle

A continuation vehicle (CV), also called a continuation fund, is a new private equity fund raised by an existing GP to acquire one or more portfolio assets from a prior fund managed by the same GP. The transaction recapitalizes the position: secondary-market buyers anchor the new CV at a price established through a competitive process, existing LPs in the prior fund are offered a choice to either roll their economic interest into the CV or cash out at the deal price, and the GP resets the hold period and economics on the asset. A CV is one of two main forms of GP-led secondaries; the other is a strip sale or structured equity transaction.

The economic logic is straightforward when stated plainly. The sponsor believes the asset has more upside that a traditional fund life will not let it capture, often because the original fund is nearing the end of its life or because the asset's valuation has been compressed by market conditions that the sponsor expects will reverse. A traditional exit at the current price would crystallize a loss or a sub-target return. A continuation vehicle, by contrast, lets the sponsor (a) deliver cash-out liquidity to the existing LPs who want it, (b) deliver a roll-forward option to the LPs who want continued exposure to the asset, and (c) keep operating the company under a fresh fund mandate with a reset hold period and often a fresh equity tranche for follow-on investment or M&A.

GP-Led vs LP-Led Secondaries

The secondaries market splits cleanly along the lines of who initiates the deal.

GP-Led Secondary

A secondary-market transaction initiated by the GP managing a fund, typically structured as a continuation vehicle, a strip sale, or a structured equity / preferred equity tender into the existing fund. The GP runs the process, selects the secondary buyers, sets the price discovery mechanism, and (in a CV) continues to manage the asset in the new vehicle. Contrast with an LP-led secondary, where an individual limited partner sells its fund interest to a secondary buyer on its own initiative, without GP involvement beyond standard consent and right-of-first-refusal mechanics.

GP-led deals were a niche product in the 2010s and have become the dominant share of secondaries since 2022. Their growth has been driven by the same forces that produced the post-2022 exit drought: rate-driven compression of asset multiples, soft strategic and IPO exit markets, and the DPI pressure (distributions to paid-in capital) that LPs have been putting on sponsors who have not returned cash at the historical pace.

LP-led secondaries, where an LP sells its limited-partner stake in a fund to a secondary buyer, continue to grow but are now a smaller share of the market than GP-leds. They serve a different purpose: portfolio rebalancing for LPs (pensions, endowments, sovereign wealth funds, family offices) who need to manage their PE allocation, exit specific sponsor relationships, or generate liquidity at the fund-stake level rather than the asset level.

The 2025 numbers are what made the rest of the industry start paying attention to the CV market.

Total secondaries volume reached roughly $230 to 240 billion in 2025, with the back half of the year producing the strongest quarterly volume on record. GP-led secondaries specifically reached roughly $116 billion for the full year, with H1 2025 alone producing $47 billion of GP-led volume per Jefferies and $48 billion per Evercore (the two firms publish slightly different methodologies but the magnitude is the same). H1 2025 GP-led volume was up roughly 68 percent year over year.

Inside GP-led, continuation vehicles dominated. Roughly 87 percent of H1 2025 GP-led volume was in CVs (single-asset and multi-asset combined), with the balance in structured equity, fund finance, and tender offers. There were 147 continuation-fund related exits in 2025, a record and an 18.5 percent increase over 2024. Single-asset CVs and multi-asset CVs together made up roughly 77 percent of GP-led deals in 2025. The mid-2020s have been the formal arrival of the CV as a mainstream PE exit option rather than an edge-case structure used by a handful of sponsors.

GP-led's share of total secondaries has moved from roughly 14 percent in 2023 to close to half in 2025, the fastest re-weighting of any sub-segment in the alternative-asset universe over that period. The Jefferies and Evercore reports are the standard market references; the Jefferies H1 2025 Global Secondary Market Review is the most accessible primary source. Kroll's recent secondaries publication frames CVs explicitly as a mainstream exit alternative rather than a workaround for under-performing assets.

The demand-side driver, in one sentence, is that the 2021-2022 take-private cohort cannot exit at entry multiples under current market conditions. The SaaS valuation reset is the most acute case, but the pattern extends across software, consumer, industrials, and healthcare buyouts financed at peak valuations and now sitting in funds that need to deliver DPI to LPs. CVs are the cleanest mechanism for the industry to deliver that liquidity without crystallizing the loss.

The mechanics of a CV process have standardized considerably since the early days of the structure. A modern GP-led CV runs along roughly the following sequence.

Step 7 is where the alignment story actually lives. A CV that lets the GP cash out its carry at the deal price without re-committing leaves the new secondary buyers and the rolling LPs holding an asset the GP no longer has skin in. Modern CV structures require the GP to roll a meaningful share (typically 50 to 100 percent) of crystallized carry into the new vehicle, plus a fresh GP commit, so the GP's economic exposure to the asset continues at the deal price and going forward. Without that, the structure does not pass LPAC scrutiny in 2025.

The full CV process, end to end, typically takes six to nine months from advisor mandate to close, depending on deal size, asset complexity, regulatory clearances, and the speed of LPAC consent.

CV deals come in two main shapes, and the distinction matters for pricing, buyer mix, and the underlying motivation.

A single-asset continuation vehicle (SACV) is exactly what it sounds like: the CV holds one portfolio company. SACVs are the structure used for trophy assets the GP wants to hold longer, where the conviction on the specific asset is high and the sponsor can credibly argue for a fresh hold period at a market-clearing price. SACVs tend to attract larger secondary buyers, often two to four buyers in a deal, with bigger check sizes (frequently $500 million to 2 billion-plus per check on the larger deals). Pricing in SACVs is generally tighter to NAV than in multi-asset deals because the buyer is making a concentrated single-name bet on an asset they have diligenced as a primary, not as a portfolio.

A multi-asset continuation vehicle (MACV) holds two or more portfolio companies, typically a basket of remaining assets from a fund nearing the end of its life or a tail-end clean-up sale. MACVs are more like a traditional secondary in structure, with broader buyer participation and pricing that more often involves a discount to aggregate NAV because the buyer is taking on portfolio risk across multiple assets.

The 2025 mix tilted further toward SACVs: high-conviction single-asset deals on assets that 2021-2022 buyouts have not yet had time to mature, where the sponsor's pitch to the secondary market is "this asset is genuinely better than the market environment will price right now, give me more time." Belron is the canonical example.

The CD&R / Belron transaction, which closed in December 2021, is the textbook single-asset CV deal at scale and worth working through in detail because it is the cleanest illustration of the structure.

Several things make Belron the clean case study. First, the asset profile is exactly what SACVs are designed for: a global, market-leading, cash-generative business with limited cyclicality and continued operational upside, the kind of trophy holding a sponsor genuinely wants more time on rather than is forced to keep. Second, the two-part structure captures both economies of a CV process: a real secondary sale to a top-tier buyer syndicate that establishes market pricing, and a continuation vehicle for the remaining stake that carries the deal price into a fresh fund with reset economics. Third, the size (€21 billion enterprise value, with substantial equity changing hands) put the deal among the largest single-asset CVs ever closed and demonstrated that the structure scales to the largest assets in the buyout universe.

The Belron precedent reshaped how the rest of the industry thought about CVs. A €21 billion deal demonstrated that the structure was not a workaround for assets the sponsor cannot exit elsewhere; it was a credible, sometimes preferred, exit option for trophy assets the sponsor wants to keep. The 2025-2026 pipeline of single-asset CVs in the $3 to 15 billion range has expanded significantly off the Belron template.

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The structural objection to GP-led continuation vehicles is straightforward: the GP is on both sides of the trade. The GP is the selling agent (representing the existing fund) and the buying agent (running the new CV) simultaneously, with an economic incentive to set the deal price in a way that maximizes its own future carry on the CV rather than maximize the cash-out value for existing LPs. The industry has built a layered set of conventions to manage this conflict, and the layers have hardened materially since 2023.

The conflict-management stack, in current best practice:

Independent fairness opinions from a top valuation firm (Houlihan Lokey, Kroll, or equivalent) on both the deal price and the structure. The fairness opinion is the document the LPAC relies on to demonstrate that the consent decision was made on independent advice rather than GP-set pricing.

LPAC consent of the existing fund. The Limited Partner Advisory Committee, typically populated by large institutional LPs (sovereigns, major pensions, endowments, fund-of-funds), reviews the full transaction terms and votes to approve or reject. Consent is required; without it the deal cannot proceed.

ILPA-aligned disclosure. The Institutional Limited Partners Association has published guidance for continuation fund processes covering fee disclosure, carry disclosure, conflict-of-interest disclosure, and the timing and form of the LP roll-vs-cash-out election. Modern CV transactions follow this guidance explicitly, with disclosure packages that document compliance.

Carry reset and GP commit roll-in. The GP is required to roll a meaningful share of crystallized carry from the prior fund into the new CV, plus typically commit a fresh GP investment alongside the secondary buyers. This re-establishes economic alignment going forward.

Competitive price discovery. The deal price has to come from a process the secondary market actually ran, with multiple bidders and an advisor managing the auction, not from a single bilateral negotiation between the GP and a friendly buyer. The competitive process is what makes the fairness opinion defensible.

Status quo option for LPs. Existing LPs must be given a real choice: either roll their economics into the CV at the deal price, or cash out at the deal price. A CV structure that effectively forces LPs into one option (because the cash-out terms are economically unattractive or the roll terms are not actually offered) does not meet modern best practice.

Despite the layered mechanics, the conflict is fundamentally not eliminated; it is managed. The reasonable counter-argument is that the conflict was always present in PE economics (the GP has the same dual role in any portfolio-level decision) and that the formalization in CV processes is actually a stronger conflict-management framework than what governs many other PE decisions. The opposing view, voiced by large LPs and academic commentary, is that the rapid growth of CVs reflects a sponsor convenience that defers mark-to-market reality and locks LPs into hold periods they would not have chosen freely. Both perspectives have merit and both surface regularly in 2025-2026 interview discussions.

The other tool in PE's post-2022 liquidity playbook is the NAV loan: borrowing against the unrealized net asset value of a portfolio to fund distributions or follow-on investment without selling any assets. NAV loans and CVs are related but mechanically distinct, and the distinction matters for interviews.

NAV Loan

A NAV (net asset value) loan is a fund-level credit facility extended to a private equity fund (or to a special purpose vehicle owning the fund's interests), secured by the unrealized value of the fund's portfolio. The lender (typically a specialty credit fund, a sovereign wealth vehicle, or a bank) underwrites the loan against an estimate of the diversified portfolio's value, often at conservative loan-to-value ratios in the 10 to 25 percent range. The GP uses the proceeds to fund a distribution to LPs (creating DPI without selling assets), to fund follow-on investments in existing portfolio companies, or to bridge other liquidity needs.

A CV recapitalizes a specific asset at a market-clearing price and resets the hold period; a NAV loan adds debt at the fund level against the existing portfolio NAV without changing ownership or pricing. The CV creates real liquidity by selling the asset (or a portion of it) to new buyers; the NAV loan creates liquidity by borrowing against the asset and creates an obligation to repay later.

The 2025 controversy around NAV loans centered on LP pushback: large institutional LPs have raised concerns about cross-collateralization risk (the loan is typically secured by the whole portfolio, so a single asset's distress can endanger the fund's other holdings), about the use of NAV loan proceeds for distributions that produce DPI without genuine realization, and about the transparency of disclosure to LPs at the time of borrowing. Coverage in the Financial Times, Bloomberg, and PEI through 2024 and 2025 documented several specific cases where LPs publicly objected, and ILPA has been pushed to issue guidance on NAV loan transparency.

In practice, sponsors increasingly use both tools in combination: a CV on a specific trophy asset to recapitalize the position and reset the hold, plus a NAV loan at the fund level to bridge distribution timing. The combination produces a fund-level outcome that delivers DPI to LPs and keeps the operating assets in the sponsor's hands, at the cost of layered complexity and elevated fund-level leverage.

The buyer side of the GP-led market is concentrated among a relatively small group of dedicated secondaries funds. The major buyers in 2025-2026 single-asset CV deals include Lexington Partners (now part of Franklin Templeton, one of the largest secondaries managers globally), Ardian (French alternative-asset manager with a flagship secondaries franchise), HarbourVest Partners, Goldman Sachs Asset Management (through the Vintage fund series), Blackstone Strategic Partners (Blackstone's dedicated secondaries platform), Coller Capital, Pantheon, Hamilton Lane, Glendower Capital (CVC), Neuberger Berman, AlpInvest (Carlyle), and TPG NewQuest in Asia.

The mega-secondaries funds raised in 2024-2025 are notable for their scale: Lexington, Ardian, Goldman Sachs Vintage, and Blackstone Strategic Partners have each raised funds in the $20 billion-plus range, which is what is making the larger SACV deals (Belron-scale and above) financeable in the first place. Without dedicated secondary capital at that scale, the structure would not work for trophy assets in the €15-30 billion+ enterprise-value range.

Pension funds and sovereign wealth funds (CalPERS, CalSTRS, GIC, ADIA, CDPQ, OTPP, AustralianSuper) participate in CV deals both as direct co-investors alongside the dedicated secondaries funds and as anchor LPs in the secondaries funds themselves. The GIC participation in the Belron syndicate is a clean example of a sovereign-wealth direct stake in a SACV.

Check sizes vary substantially by deal type. Multi-asset CV deals typically see 4 to 8 buyers in a deal at $50 to 250 million check sizes. Single-asset CV deals at the larger end (€5 billion+ enterprise value) see 2 to 4 buyers at $500 million to 2 billion-plus per check, with the largest SACVs occasionally accommodating a single anchor buyer for the entire deal.

The advisory side of the GP-led secondaries market is concentrated among a handful of specialized practices inside the major investment banks and independent advisors. The leading firms include Lazard (one of the largest secondaries advisory practices), Evercore (rapidly growing practice with strong relationships across the major GPs and secondary buyers), Jefferies (publishes the most widely cited market data, with the H1 and full-year Global Secondary Market Review used as the industry reference), PJT Park Hill (part of PJT Partners, historically strong in GP-led advisory), Campbell Lutyens (independent, secondaries-focused), Greenhill (active in both LP-led and GP-led), Houlihan Lokey (strong in fairness opinions and mid-market GP-led), and Raymond James / Cebile (mid-market secondaries advisory).

The analyst experience in a secondaries practice differs from traditional M&A in several specific ways. The deal volume per banker is higher because secondaries deals close more quickly than M&A (typically six to nine months end to end) and involve less negotiation of corporate-deal terms. The valuation work is fund-and-portfolio-oriented rather than single-company DCF, with significant focus on fund-level cash-flow projections, distribution waterfalls, and secondary pricing methodology. The buyer universe is smaller and more relationship-driven than the strategic-and-sponsor buyer universe in M&A, so a banker's relationships with the major secondaries funds matter more than process technology.

The recruiting path into secondaries advisory is increasingly distinct from traditional M&A. Most secondaries hires today come either from traditional PE coverage groups within IB (Lazard, Evercore, Jefferies all recruit out of their financial sponsors or PE coverage teams) or from secondaries funds directly. Lateral moves from traditional M&A into a secondaries seat are common at the VP and Director levels. For a candidate targeting the IB to PE transition, secondaries advisory at one of the leading firms is increasingly a strong launching pad into either a secondaries fund seat or a traditional PE platform, since the underwriting skills transfer cleanly.

Get the complete guide: Download our comprehensive 160-page PDF covering valuation, M&A, LBO mechanics, and the interview frameworks recruiters expect across PE, secondaries, and IB advisory, access the IB Interview Guide.

For quick reference, here is how the four major liquidity tools compare across the dimensions interviewers most often probe.

The table is the version interviewers expect candidates to be able to draw from memory.

The CV question shows up in 2025-2026 interviews most frequently in three forms. Each has a representative answer below.

"Walk me through a continuation vehicle."

A continuation vehicle is a new private equity fund that an existing GP raises to buy one or more portfolio assets out of a prior fund the same GP manages. The mechanics: the GP identifies a portfolio company (typically a trophy asset with more upside the original fund cannot capture), runs a competitive process with the major secondaries buyers through an advisor like Lazard or Evercore, gets a fairness opinion from an independent valuation firm, secures LPAC consent of the existing fund, offers existing LPs a choice to roll into the new CV at the deal price or cash out at the deal price, and closes the new vehicle with the secondary buyers as anchor LPs. The GP rolls a meaningful share of crystallized carry into the new CV and commits a fresh GP investment to demonstrate alignment. CD&R's December 2021 Belron deal at a €21 billion valuation, with Hellman & Friedman, GIC, and BlackRock Private Equity Partners anchoring the secondary side, is the textbook precedent at scale.

"Why has the secondaries market grown so fast?"

Three reinforcing drivers. The rate-driven multiple compression of 2022-2026 left a large cohort of 2021-2022 take-private and buyout deals stuck at entry valuations the current market will not clear, particularly in software, where the SaaS valuation reset compressed multiples by 60 to 70 percent from peak. LPs have applied sustained DPI pressure on sponsors who have not returned cash at the historical pace. And the secondaries-buyer side has built out dedicated capital at scale, with the major dedicated secondaries funds (Lexington, Ardian, Goldman Sachs Vintage, Blackstone Strategic Partners) raising $20 billion-plus vehicles, which makes the larger SACV deals financeable. The combination took GP-led volume from roughly $15 billion in 2021 to $116 billion in 2025, and GP-led from 14 percent of secondaries to nearly half.

"What's the conflict of interest in a continuation vehicle, and how is it handled?"

The GP is on both sides of the trade: it represents the selling fund and runs the buying CV. The industry handles this through five layered mechanisms. Independent fairness opinions from Houlihan Lokey or Kroll on the deal price. LPAC consent of the existing fund, with full disclosure under ILPA guidance. A competitive secondary-buyer process that establishes market pricing. A real status-quo option for existing LPs (roll or cash out at the same price). And GP carry roll-forward into the new CV plus fresh GP commit, so the GP retains economic exposure to the asset going forward at the deal price. The conflict is managed rather than eliminated, and the strength of the management framework is what makes a 2025 CV defensible where a 2021-era CV often was not.

The most common framing errors candidates make in interviews:

Continuation vehicles are the structural innovation that defined private equity's response to the post-2022 exit drought. They have moved from edge-case workaround to a mainstream exit option in roughly three years, driven by sponsors needing to deliver DPI without crystallizing losses on the 2021-2022 buyout cohort and by a secondaries-buyer side that has built out dedicated capital at scale. The Belron deal is the precedent that confirmed the structure works at the largest trophy-asset level, and the 2025-2026 pipeline of single-asset CVs in the multi-billion-dollar range suggests the structure is now a permanent fixture of the PE exit menu.

For candidates targeting PE, secondaries, or GP-led advisory seats, the CV story is one of the most reliable interview topics in 2026. The recruiter expects you to name the mechanics, name a deal, name the conflict-management framework, and place CVs in the context of the broader PE liquidity environment that drove their growth. For the demand side of why this market exploded, see the SaaS valuation reset post, which covers the asset-side compression that produced the exit problem CVs are solving. For the GP economics that CVs reset and roll forward (carry mechanics, hurdle, waterfall), see the carried interest explainer, which covers how the GP actually gets paid on a CV's economics over the new vehicle's hold period.

For deeper reading on adjacent topics: our private equity fund structure post covers the underlying GP/LP relationship and the LPAC mechanics referenced throughout this post. The exit strategies post covers the broader menu of traditional exit options the CV market is increasingly supplementing. The secondary buyout vs strategic exit post covers the sponsor-to-sponsor secondary that CVs are increasingly competing with as the preferred liquidity tool. And the dividend recapitalization post covers the related-but-distinct mechanism of returning capital to LPs without an exit, which NAV loans have largely replaced in 2024-2026.