Resources / Glossary / Continuation fund

Continuation fund.

Aka. Continuation vehicle · CV · single-asset continuation fund
All terms

What is a continuation fund?

A continuation fund is a new investment vehicle that a general partner raises specifically to purchase one or more assets out of one of its own existing funds. The buyer and the seller are, in effect, the same manager — the GP moves a portfolio company from an aging fund that needs to wind down into a fresh vehicle backed largely by new secondary capital.

The structure solves a recurring problem. A fund has a finite life, but a GP's best-performing assets sometimes still have years of value creation left when the fund must return capital. Rather than sell a prized company to a competitor at the fund's deadline, the GP rolls it into a continuation fund and keeps managing it.

Existing LPs in the old fund are given a choice: take the deal price as a cash exit, or roll their interest into the continuation fund and stay invested in the asset. Because the GP sits on both sides of the transaction, these deals are the most scrutinized corner of the GP-led secondary market.

How a continuation fund is structured

A continuation fund transaction follows a recognizable sequence, with conflict management woven through it.

  1. Asset selection. The GP identifies the asset or assets to move — often a single trophy company (a single-asset CV) or a small bundle (a multi-asset CV).
  2. Price discovery. A price is set, usually validated by a competitive process among secondary buyers and an independent fairness opinion, since the GP cannot simply name its own number.
  3. The LP election. Existing LPs choose to cash out at the price or roll into the new vehicle. The advisory committee reviews terms and conflicts.
  4. New capital and new terms. Secondary investors fund the purchase, and the continuation fund is established with its own life, fees, and a reset carried interest — often with the GP rolling its own crystallized carry back into the deal to signal alignment.

The fee and carry reset is contentious: rolling LPs can find themselves paying fresh fees and a new carry hurdle on an asset they already owned, which is why governance and fairness around pricing carry so much weight.

Why continuation funds have grown — and the conflict at the core

Continuation funds have moved from a niche, sometimes stigmatized tool into a mainstream part of the market. They let GPs hold winners through their full value-creation arc, return capital to LPs who want liquidity, and create a track-record of realized gains. For secondary buyers, they offer access to known, de-risked assets rather than a blind pool.

The structural tension never disappears: the GP is selling an asset from a fund it manages to another fund it manages, and it influences the price. A low price favors the buying vehicle and the rolling LPs; a high price favors the selling fund and exiting LPs. Robust price discovery, independent fairness opinions, and an engaged advisory committee are what separate a clean continuation fund from one that simply transfers value between sets of investors the GP is supposed to serve equally.

Frequently asked.

5 questions
01 Why would a GP move an asset into a continuation fund instead of selling it?

Usually because the asset still has meaningful upside but the fund holding it has reached the end of its life and must return capital. Selling to a third party would crystallize value the GP believes it can still grow, and a strong company is hard to replace. A continuation fund lets the manager keep compounding that value under its own ownership.

It also lets the GP return cash to LPs who want out, while offering those who believe in the asset a way to stay invested.

02 What choice do existing LPs face in a continuation fund deal?

They are offered a binary election: sell their interest at the transaction price and receive cash now, or roll their interest into the new continuation fund and remain exposed to the asset's future performance. Some structures offer a status-quo option, but the core choice is cash out versus roll over.

Each path has trade-offs. Cashing out provides certain liquidity but forfeits future upside; rolling preserves exposure but often means accepting new fees and a reset carry on an asset the LP already held.

03 What's the conflict of interest in a continuation fund?

The GP is effectively on both sides of the trade — selling an asset out of a fund it manages and buying it into another fund it manages — while also setting the price. A price that is too low advantages the new vehicle and disadvantages exiting LPs; a price too high does the reverse. Either way, the manager's compensation is affected.

This is why these deals rely on independent fairness opinions, competitive price discovery among secondary buyers, and approval from the fund's advisory committee. The credibility of a continuation fund rests on demonstrating that exiting and rolling LPs were treated even-handedly.

04 What's the difference between a single-asset and multi-asset continuation fund?

A single-asset continuation fund holds one portfolio company — typically a standout performer the GP wants to keep. A multi-asset continuation fund bundles several companies from the old fund into one vehicle.

Single-asset deals concentrate risk and reward in one company, so buyers diligence that company intensely. Multi-asset deals offer diversification but can make pricing and the LP election more complex, since investors are evaluating a small portfolio rather than a single name.

05 How do LPs and buyers diligence a continuation fund transaction?

They need to reconstruct the full history of the asset being moved: the original investment thesis, what has happened to the company since, prior valuations, and the basis for the proposed price. Because the deal carries an inherent conflict, the quality and transparency of this record is central to assessing fairness.

When the original deal file, the value-creation history, and the ongoing monitoring data for an asset all remain in one queryable record, both the advisory committee and incoming buyers can evaluate the continuation fund against a complete picture — rather than a freshly assembled, GP-curated summary.

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