The Modern Triple Track: IPO, M&A, and Continuation Vehicles

Introduction

The traditional dual-track exit ran an IPO process and an M&A sale process in parallel. The modern equivalent has added a third option: the GP-led continuation vehicle, which lets a sponsor sell a portfolio company from one of its funds into a newly-formed continuation fund managed by the same GP. The structure has matured from a niche tool used to extend hold periods into a mainstream exit path. By 2025, single-asset continuation vehicles accounted for nearly 19 percent of sponsor-backed exit volume, and triple-track processes have become standard practice for sophisticated PE sponsors. This article walks through how CVs work and how they integrate with the broader sponsor exit framework.

A GP-led continuation vehicle is a structured transaction that moves one or more portfolio companies from an existing private-equity fund into a newly-formed fund managed by the same GP, with the existing fund's limited partners offered the choice between cashing out or rolling their exposure into the new vehicle.

The Single-Asset Continuation Fund

The most common modern CV structure is the single-asset continuation fund (SACV), which holds one portfolio company that the GP wants to retain beyond the original fund's life. The GP conducts an auction process to sell the asset from the legacy fund into the SACV at a market-validated price, with secondary buyers (Lexington Partners, HarbourVest, Coller, Strategic Partners, others) providing the new capital that funds the transaction.

Single-Asset Continuation Vehicle (SACV)

A GP-led secondary transaction that moves one portfolio company from an existing private-equity fund into a newly-formed continuation fund managed by the same GP. The structure includes a secondary auction that prices the asset, an existing-LP choice between cashing out or rolling, and a fresh capital commitment from secondary-market buyers. SACVs accounted for nearly 19 percent of sponsor-backed exit volume in H1 2025, a meaningful share of the total private-equity exit landscape and a substantial increase from prior years.

The Existing LP Choice

Existing LPs in the legacy fund face three choices. They can cash out at the auction price, monetizing their stake and receiving distributions immediately. They can roll their existing exposure into the SACV, maintaining their position with the same economic terms but now in a fresh-vintage fund. They can roll and commit new capital, increasing their exposure to the asset through the new vehicle. The choice is voluntary, and the typical mix of cash-out, roll, and roll-plus-commit varies by transaction.

Auction-Based Pricing

The price at which the asset moves into the CV is set by the secondary auction, with multiple secondary buyers bidding for the new fund's LP commitments. The auction validates the asset's market value and protects existing LPs from claims that the GP transferred the asset at a below-market price. Strong secondary auctions produce competitive pricing that compares favorably to alternative exit paths.

The triple-track expands the dual-track framework to include the CV path explicitly.

Three Paths, Three Different Buyer Universes

The triple-track engages three different buyer universes simultaneously. The IPO path engages public-market institutional investors. The M&A path engages strategic and sponsor buyers. The CV path engages secondary-market private-equity LP investors. The three universes have different preferences, different valuation methodologies, and different willingness to pay for the same asset, which produces genuine optionality across the paths.

When CVs Win

CVs tend to win when the GP has high conviction in continued value creation, when the existing portfolio company benefits from continued sponsor support, when the asset's growth trajectory is clearer to specialists than to public-market investors, and when the asset is large enough to support a stand-alone secondary auction (typically $500 million plus). The CV preserves operational continuity (the GP remains the controlling shareholder) and lets the sponsor capture additional value through extended hold periods.

When the IPO or M&A Path Wins

The IPO path wins when broad institutional distribution adds value, when the public market's premium valuation exceeds what secondary buyers will pay, and when the sponsor's exit calendar is flexible enough to support post-IPO follow-on selling. The M&A path wins when a strategic buyer offers premium consideration for synergies, when the sponsor wants clean monetization without retained exposure, and when the asset's specific industry positioning attracts strategic interest.

Adding the CV to a Dual-Track

Adding the CV path to a dual-track is straightforward operationally because the secondary auction does not interfere with the IPO or M&A tracks. The GP and a secondary advisor (Lazard, Evercore, Houlihan Lokey) run the auction in parallel. The cumulative cost is higher than two tracks, but the optionality value justifies the cost on assets at $500 million plus scale.

IPO, M&A sale, single-asset CV: three buyer universes, three different valuation methodologies, one asset moving down whichever path produces the best outcome. The triple track is the most evolved version of the sponsor exit framework available as of 2025, and where the largest and most sought-after sponsor-backed companies actually get monetized. With the alternatives now mapped end to end, Section 4 turns to the second large product family in ECM: follow-on offerings and other secondary equity products that issuers use after their initial trip to public markets.