GP-led continuation vehicles are emerging as an increasingly mainstream solution for private equity firms seeking to hold prized assets for longer while returning capital to investors. But as volumes rise, so do questions around pricing, governance and alignment.
GP-led continuation vehicles – once associated largely with fund restructurings and so-called ‘zombie’ assets – are evolving into a mainstream tool for holding prized ‘trophy’ portfolio companies while offering LPs a choice between liquidity and continued exposure.
The growth has been striking. According to PitchBook data, global GP-led exit value increased from $1billion in 2016 to $96 billion in 2025, with deal count rising from two to 156 (see graph 1). This explosive growth means they are taking an increasing share of all private equity exits, increasing from 0.1% of value to 7.1% over the same period (see graph 2).
The secondary market has continued to expand rapidly due to IPO markets remained largely shut and weakened fundraising activity. Ardian estimates that GP-led transactions accounted for around half of the secondary volume that closed in 2025.
For many market participants, that growth increasingly looks structural rather than cyclical. “There is a growing conviction among investors that companies are simply better off staying private,” says Nicolas Moura, senior EMEA private capital analyst at PitchBook. “Private markets will mature and develop their own liquidity mechanisms.”
That evolution is changing how private equity firms think about ownership duration, liquidity and exits – while also raising questions about valuation, governance and trust.
Graph 1
Graph 2
From zombie funds to trophy assets
The continuation vehicle market has changed dramatically over the past decade. Initially, many GP-led processes focused on older or harder-to-exit assets. Today, sponsors increasingly use continuation vehicles to retain their highest-performing companies for longer.
“We’ve been doing GP-led transactions since 2014-15 when they weren’t called continuation vehicles, they were called restructurings or zombie funds,” says Antony Anastasiadis, a managing director in the secondary investment team at Hamilton Lane. “But the market’s changed.
“In 2017-18 we started to see some really high-quality GPs, very long-standing franchises, pursue these opportunities to hold on to their best assets, or provide new capital to existing businesses that needed it. Continuation funds have moved from opportunistic to mainstream.”
That shift reflects both market conditions and broader structural changes within private equity. Holding periods have lengthened, IPO markets have remained inconsistent, and many managers believe their strongest assets still have substantial upside beyond the traditional fund lifecycle.
“Continuation funds have become part of the private markets toolkit,” says Julien Barral, senior director within the private markets team at bfinance. “Structurally, they address a real issue in private equity – good assets do not always fit within a 10-year fund life, particularly when value creation still has several years to run.”
Private markets will mature and develop their own liquidity mechanisms.
Nicolas Moura, PitchBook
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At the same time, the liquidity drought across private markets has accelerated adoption. “With distributions under pressure and M&A/IPO windows more constrained, GP-led transactions have become a way of creating liquidity without forcing a conventional sale,” Barral says. “We see the current level of use to be certainly amplified by that environment.”
Anastasiadis argues that continuation vehicles have proven they are not simply an exit substitute in weak markets. He notes GP-led volumes continued growing even during the exceptionally active exit environment of 2021. “In a market that had one of the most liquid exit healthy environments in quite a while, GP-leds set a record,” he says.
Instead, continuation vehicles are increasingly becoming a permanent addition to the private equity exit toolkit. “All GPs understand that they have another option in their exit process,” says Matthieu Teyssier, senior managing director within the secondary and primary team at Ardian. “They still have trade sales, private equity sales, an IPO and now GP-led exits as well.”
Why everybody likes them
The appeal of continuation vehicles lies partly in the fact that each participant can achieve something different from the same transaction. For sponsors, continuation vehicles allow them to retain companies they still believe have substantial growth potential, rather than exiting prematurely because of fund timelines.
“There is a benefit for GPs if they prefer to keep the asset and need more time, because they believe in the further upside,” says Teyssier.
For investors in the original fund, continuation vehicles provide optionality at a time when distributions remain under pressure. “The LPs have the opportunity, if they still believe in the upside, to roll the proceeds into the continuation vehicle,” Teyssier says. Alternatively, they can take liquidity immediately.
That flexibility has become particularly valuable as institutional investors face prolonged distribution slowdowns across private markets portfolios. According to PitchBook, European distributions as a percentage of NAV remain below long-term averages.
Meanwhile, secondary buyers continue to see substantial opportunity. “The thing that will restrain the market is not supply, it’s capital coming in,” Anastasiadis says. “We’re at one of the lowest points we’ve been at in an industry for dry powder in a long time relative to the opportunity set.”
Or, as he puts it succinctly, the market is “long opportunity, short capital”.
Ardian estimates that secondary buyers currently see more than four times as much GP-led deal supply as available capital. “The market is still largely undercapitalised,” Teyssier says. That imbalance is helping sustain pricing discipline even as transaction volumes grow rapidly.
Continuation funds have moved from opportunistic to mainstream.
Antony Anastasiadis, Hamilton Lane
Maintaining trust
Yet the growth of continuation vehicles also exposes an uncomfortable tension: sponsors are effectively selling assets to vehicles they continue to manage themselves. That creates inevitable questions around valuation, process fairness and alignment.
“Pricing is the most visible one,” Barral says. “LPs are effectively being asked to transact with their existing manager, who both knows the asset best and is heavily involved in shaping the outcome.”
The concern is not simply valuation itself, but whether pricing is genuinely market-driven. “If you have limited price tension, a tightly controlled process, and constrained access to information, then the perception of misalignment increases very quickly,” Barral says.
Market participants argue that processes have become far more sophisticated in response. “It’s much stricter today compared to 10 years ago,” Teyssier says. “Communication, transparency are very important in these transactions.”
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Modern GP-led transactions typically involve fairness opinions, third-party advisers, LPAC oversight and competitive auction processes designed to create independent price validation.
Teyssier says secondary buyers spend significant time scrutinising valuation methodologies and historical performance data. “It’s our job to make sure it is a fair price,” he says. “It will be a balanced price, because the GP is a seller, but is a buyer as well.”
Anastasiadis similarly rejects the idea that continuation vehicles operate outside normal market discipline. “We’re looking at the company, we’re looking at where comparables trade,” he says. “It’s very much bottom-up, like any other M&A deal.”
But despite those safeguards, advisers warn that governance quality still varies significantly between managers. “The quality of the process is very GP-dependent,” Barral says. “There are clearly managers who run these transactions with a high degree of transparency and alignment, but there are also situations where the approach is more constrained and not fully aligned with LP interests.”
In some cases, LPs may also feel pressured to accept terms simply because there is a lack of other options. “In an environment where LPs are heavily focused on liquidity, we are seeing a tendency of investors needing to accept continuation vehicle terms to achieve exits and get capital back,” Barral says.
That dynamic means trust has become critical to the long-term sustainability of the market. “The more material risk is a loss of trust rather than simple overuse,” Barral says.
We don’t see GP-leds only as a way to compensate for a lack of liquidity. We see a clear trend.
Matthieu Teyssier, Ardian
Maintaining discipline
Despite concerns around growth and competition, market participants insist that buyers remain highly selective. In fact, many GP-led transactions never complete.
“Last year, we saw $200 billion of deal flow,” Anastasiadis says. “About $100 billion cleared, so 50% of GP-leds are failing.”
This supports the continued focus on asset quality. “So far, we mostly see quality assets, largely because the market is still capital-constrained,” Barral says.
Teyssier agrees that the strongest continuation vehicles continue to centre on “top-quality trophy assets”. “We want to back top-quality GPs for which are using this tool for a good reason,” he says.
Price discipline remains equally important. “If the price seems too high, or we don’t see any further upside in the future, we pass,” Teyssier says.
That selectivity has become particularly relevant due to macroeconomic uncertainty and AI potentially disrupting even blue-chip areas of the software-as-a-service market.
Anastasiadis says activity in Europe has slowed this year as some technology-related processes have been delayed. “We’ve seen that take a step back,” Anastasiadis says. “It has slowed things down.”
Yet he expects many software-related continuation vehicles eventually to return once sponsors and buyers gain greater confidence around AI-related impacts. “We’re in the middle of the disruption,” he says. “Some companies potentially won’t come back at all to the CV market, but I think other companies that weren’t in the CV market will come to it.”
The bar for execution remains high. In practice, weaker deals simply do not get done.
Julien Barral, bfinance
The next phase
As continuation vehicles become more established, the debate is increasingly shifting to how extensively they will reshape private market liquidity.
For some participants, GP-leds are simply becoming another standard exit route within a maturing private capital ecosystem. “We don’t see GP-leds only as a way to compensate for the lack of liquidity,” Teyssier says. “We see a clear trend.”
Others believe the market’s future will depend heavily on maintaining confidence in process integrity and governance standards. “It only works if the LPs believe pricing is robust and optionality is real,” Barral says.
There are also signs that the market may gradually expand beyond today’s concentration on trophy assets. Teyssier believes there will increasingly be a market for more mature or harder-to-exit companies, albeit often at steeper discounts. “There is, and will continue to be, a market for more challenging assets,” he says.
Still, most participants expect discipline to remain strong while capital remains relatively scarce. “The bar for execution remains high,” Barral says. “In practice, weaker deals simply do not get done.”
That balance may ultimately determine whether continuation vehicles become merely a useful liquidity tool — or something much larger.
As public markets shrink and private ownership periods lengthen, continuation vehicles increasingly look less like a temporary workaround and more like part of a broader shift towards private markets creating their own internal liquidity infrastructure.