Introduction
A continuation vehicle often begins as a sale question. A sponsor asks what a mature company would fetch, the bids fall short of what the deal team thinks the remaining plan is worth, and the fund that owns the company is running out of time. A continuation vehicle (CV) settles that mismatch without handing control to a new owner: the company moves from the old fund into a new vehicle the same manager runs, and the fund's investors choose between cash and staying in. The financial sponsors group (FSG) usually hears the sale question first, but the bank's private capital advisory (PCA) team runs the answer, because the transaction happens at the level of the fund, not the company.
A Continuation Vehicle Against a Third-Party Sale
A third-party sale ends the sponsor's ownership: every limited partner (LP) is paid at a price competing buyers set, and the upside passes to the buyer. A CV splits that decision investor by investor. LPs who elect to sell take cash at a price led by secondary buyers, those who roll keep their exposure, and the general partner (GP) keeps managing the company under new terms. The PCA guide's route-by-route comparison sets both beside an extension and a recap from the LPs' side.
For the sponsor, the trade is the remaining plan against price evidence. A sale surrenders the plan for a price tested by buyers who want control; a CV keeps the plan, but its price comes from investors buying into the sponsor's own forecast. Which route fits depends on whether the bids or the plan sit closer to the company's value, the comparison behind how sponsors weigh selling against holding.
Signals That Point Toward a Continuation Vehicle Conversation
Coverage usually sees the conditions for a CV in the portfolio review before a sponsor names the product:
- A trophy asset with runway: the deal team sees years of growth left.
- A fund near the end of its term: the company must leave soon, whatever the market offers.
- A sale market that undervalues the plan: bidders price trailing results, not the forecast.
- An asset too large or specific for buyers: few strategics or sponsors can pay for or finance it.
The first weighs most: secondary buyers price the plan, so visible runway lets them pay close to the sponsor's own view.
- Trophy Asset (Private Equity)
A portfolio company a sponsor regards as among its strongest holdings, with sustained earnings growth and a plan with clear runway. In exit discussions the label marks a company the sponsor would rather keep than sell at the price on offer, a natural candidate for a single-asset continuation vehicle.
Sun Capital's first single-asset CV shows the pattern. Its affiliate completed the vehicle for Fletchers Solicitors, a UK clinical negligence and personal injury firm, in February 2026. Earnings before interest, taxes, depreciation and amortization (EBITDA) had risen from £8.0 million at the 2021 investment to £37.9 million in the year to September 2025, helped by ten add-on acquisitions, and the GP reinvested its entire position plus $10 million.
When PCA Takes Over and What Coverage Keeps
Once the sponsor wants a CV price rather than a comparison, the work moves from the company to the fund: the old fund sells, a vehicle the same sponsor manages buys, and the sponsor sits on both sides of the price. So the price must come from a lead investor and syndicate of secondary buyers, the fund's limited partner advisory committee (LPAC) reviews the conflict, a fairness opinion usually supports the price, and each LP elects. PCA runs those steps, set out in the sequence from mandate to LP elections; the layered protections around the GP's conflict explain what each check covers.
The Company-Level Work That Stays With FSG
Coverage keeps what concerns the company rather than the fund:
- The market check: bids from a sale process give secondary buyers and the LPAC third-party price evidence.
- The company's debt: the transfer may need lender consent or a refinancing.
- The exit from the CV: the new vehicle still has to sell or list the company.
The debt is the easiest to miss. Leveraged loans usually fall due on a change of control, and whether a move into the sponsor's own new vehicle counts depends on how the credit agreement defines the sponsor, as Dechert's review of continuation fund transfers explains. A narrow definition means a waiver or new debt, ordinary refinancing work for a sponsor-owned company.
A CV also changes what the next company mandate must satisfy. Its investors bought in at a known price, with a return target and a fresh term, so any later add-on financing, refinancing or sale is weighed against that entry price, not the old fund's cost.
PCA prices the fund-level deal once. FSG inherits the same company and sponsor with new investors behind them, a later exit deadline and return targets that shape every transaction that follows.
