Continuation Fund
Private Equity Secondaries
Definition
A continuation fund is a new vehicle formed to acquire assets from an existing fund, allowing the manager to keep holding them while offering existing investors a liquidity option.
Why it matters
Continuation funds extend exposure to assets the manager still likes, but valuation, fee resets, carry treatment, and process conflicts require careful diligence.
Common misconceptions
- •A continuation fund is not automatically distressed; it can be used for high-performing assets with more runway.
- •Rolling investors may be exposed to a new fee and carry structure, not just a passive extension.
Technical details
Investor Choices
Existing LPs may sell for cash, roll into the continuation vehicle, or elect a mix depending on transaction documents and allocation limits.
Diligence
Review valuation evidence, third-party bids, rollover economics, new fund term, leverage, fees, carry crystallization, and manager conflicts.