"Over the past decade, private equity benefited from a generally supportive exit environment. Low interest rates, accessible financing, and steadily rising valuations made it possible to bring strong portfolio companies to market with relatively little friction. Firms could crystallize gains, return capital to investors, and redeploy quickly into new opportunities. Today, the environment is different. Higher financing costs, tighter credit, and a prolonged slowdown in IPO markets have reduced overall exit activity. Holding periods across buyout funds have lengthened, and many assets remain fundamentally strong but difficult to exit at acceptable valuations."
"Against that backdrop, continuation vehicles ("CVs"), once viewed as niche or tactical, have moved closer to the center of the private equity playbook. In 2025, the GP-led secondary market had grown to approximately $105 billion, with CVs accounting for roughly 84%. Their growing role has drawn attention, and with it a familiar refrain: that CVs amount to sponsors "selling to themselves," a way to delay exits or avoid hard decisions. It is an understandable reaction to a structure that sits outside the traditional exit playbook. But viewed in context, CVs are better understood as a way of addressing competing pressures across the ecosystem."
"For general partners, they offer a mechanism to deliver liquidity to an existing fund while maintaining exposure to assets where conviction remains high. For limited partners, they introduce choice, allowing investors to take liquidity or roll exposure forward based on updated underwriting rather than legacy assumptions."
Private equity enjoyed a decade of supportive exit conditions driven by low rates, accessible financing, and rising valuations that facilitated smooth sales and rapid redeployment. The current environment features higher financing costs, tighter credit, and a slower IPO market, which has reduced exit activity and lengthened holding periods, creating an overhang of aging assets. Continuation vehicles have become a central GP-led secondary solution, capturing a large share of the market and enabling liquidity for funds while preserving exposure to high-conviction assets. CVs provide LPs with choices based on updated underwriting and help align outcomes across sponsors, investors, and portfolio companies.
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