- Private equity firms are using continuation vehicles at record scale, with about $41 billion of self-sales in H1 2025—19% of all PE exits—and full-year volumes projected above $100 billion.
- This surge is driven by a clogged exit environment, including weak IPO and M&A markets and a $3 trillion backlog of unsold PE assets, pushing GPs to seek internal liquidity solutions.
- Because GPs act as both buyer and seller, continuation deals raise conflicts-of-interest concerns over valuation, transparency, and LP pressure, prompting mounting legal and governance scrutiny.
- These dynamics may reshape PE fund terms and investor behavior, favoring larger GPs that can execute cleaner, more transparent continuation transactions while regulators and LPs reconsider standards and allocations.
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The PE industry’s use of continuation vehicles—transactions in which assets are sold by an old fund to a new fund managed by the same GP—is reaching unprecedented scale. In H1 2025 these self‐sales amounted to approximately $41 billion, accounting for 19% of all PE exits. That figure represents a roughly 60% increase over H1 2024 levels. ([ft.com](https://www.ft.com/content/88a4e3e3-cefb-48d8-ab81-75cf85039b83 By year-end, projections place total continuation-led exits at around $100-107 billion globally—up sharply from ~$70 billion in 2024. ([ft.com](https://www.ft.com/content/0236c2ce-a430-4772-b859-bda553784de2
These trends reflect broader exit‐market dysfunction: IPOs remain sluggish, strategic acquirers are scarce, valuations are under pressure, and LP distributions have substantially lagged expectations. As a consequence, GPs are increasingly turning inward, using continuation funds to provide partial liquidity to LPs and to reset assets whose exit is delayed. ([ft.com](https://www.ft.com/content/88a4e3e3-cefb-48d8-ab81-75cf85039b83 However, this shift introduces fresh conflicts of interest: the GP is both buyer and seller, valuation is self‐set, and LPs may have limited visibility. These risks are exemplified by legal challenges—most notably, the Abu Dhabi Investment Council lawsuit against EMG over its proposed continuation vehicle purchase of a 30% stake in Ascent Resources, alleging undervaluation and coercion. ([ft.com](https://www.ft.com/content/dd9fe502-b81d-4895-a6cd-ee7c42df73cd
Strategically, continuation funds serve as a pressure valve in tight markets—allowing strong assets to be retained when external markets don’t offer acceptable exits. But their ascendance may have longer‐term implications: LPs might become more selective about fund terms, push for stronger governance, prefer transparency on valuation policies, or demand optionality. Larger GPs who can deliver clean, high‐quality continuation deals will likely benefit; smaller firms may struggle under scrutiny or fail to satisfy LPs’ governance expectations. Meanwhile, investors must weigh liquidity today versus opportunity cost and carry economics. ([ft.com](https://www.ft.com/content/0236c2ce-a430-4772-b859-bda553784de2
Open questions remain: how will regulators respond? Will lawsuits lead to new fiduciary standards? How will pricing benchmarks evolve between internal continuation deals versus third‐party strategic or IPO exits? And will LPs reduce exposure, shift to co-investments or direct investing, or alter allocation strategies? ([ainvest.com](https://www.ainvest.com/news/private-equity-firms-turn-continuation-funds-60-increase-sell-buy-strategy-2507/
Supporting Notes
- In H1 2025, PE firms sold assets they owned to continuation vehicles in record $41 billion of investments—19% of all exits. ([ft.com](https://www.ft.com/content/88a4e3e3-cefb-48d8-ab81-75cf85039b83
- Full-year projections for 2025 continuation-led self-sales are $100-107 billion, up from ~$70 billion in 2024. ([ft.com](https://www.ft.com/content/0236c2ce-a430-4772-b859-bda553784de2
- PE firms sitting on over $3 trillion in unsold assets. ([ft.com](https://www.ft.com/content/88a4e3e3-cefb-48d8-ab81-75cf85039b83
- Exit channels via IPOs or strategic buyers have weakened; traditional exits preferred less by LPs. ([ft.com](https://www.ft.com/content/0236c2ce-a430-4772-b859-bda553784de2
- Valuation concerns: Example—EMG proposes to buy a 30% stake in Ascent Resources at ~$5.5 billion valuation; ADIC contends it should be >$7 billion. ([ft.com](https://www.ft.com/content/dd9fe502-b81d-4895-a6cd-ee7c42df73cd
- Legal action has delayed or suspended the EMG proposed deal until arbitration, at least through February 2026. ([ft.com](https://www.ft.com/content/cb8cc88b-dd51-4221-9a10-8a5814845365
- Majority of GP-led secondary transactions (~87%) are continuation vehicles; significant portion of large GPs (≈75%) have employed such vehicles in H1 2025. ([abbottcapital.com](https://www.abbottcapital.com/abbott-h1-2025-private-equity-market-overview/
- Pricing in continuation deals: buyout continuation vehicles often price above 90% of NAV, particularly single-asset CVs. ([abbottcapital.com](https://www.abbottcapital.com/abbott-h1-2025-private-equity-market-overview/
Sources
- www.ft.com (Financial Times) — July 23, 2025
- www.ft.com (Financial Times) — December 30, 2025
- www.ft.com (Financial Times) — December 4, 2025
- www.ft.com (Financial Times) — December 4, 2025
- www.cbhs.com (Cherry Bekaert) — 2025-06-30
- www.kpmg.com (KPMG) — recent