NEW YORK – Continuation vehicles, known in the industry as CVs, have moved from niche tool to central pillar of the private equity ecosystem. In 2025, these so-called “self-sales” surged to nearly $100 billion globally, reshaping how fund managers exit—or delay exiting—their most prized assets. The trend, driven by stalled traditional exits and pressure from institutional investors, is now sparking growing controversy.
At their core, continuation vehicles allow a private equity manager to transfer a portfolio company from one of its existing funds into a newly created vehicle it also controls. In most cases, the manager remains the same, while institutional investors—such as pension funds and insurance companies—either sell their stakes or roll them over into the new structure. In more than 80% of transactions, investors change, but ownership effectively stays “within the family.”
A record-breaking surge
After several years of steady growth, 2025 marked a new explosion in CV activity. According to industry estimates, these transactions now account for around one-fifth of all global private equity exits. The momentum shows little sign of slowing.
“2025 is likely to be another record year, and the dynamic will probably continue into 2026,” said Marion Cossin, Managing Director at Lazard. Data from Evercore show that 70% to 80% of the world’s top 100 private equity firms have already used at least one continuation vehicle.
The appeal is straightforward: with traditional auction processes frozen by valuation disputes and volatile markets, CVs offer managers a way to generate liquidity without selling into unfavorable conditions.
Pressure from investors, temptation for managers
Institutional investors, or LPs, have been pushing fund managers to return cash after years of limited distributions. In response, CVs have emerged as a flexible—some say convenient—solution. In certain cases, the same high-performing asset is rolled over multiple times.
PAI, for instance, executed a second continuation vehicle for ice cream manufacturer Froneri, which it owns alongside Nestlé, valuing the business at around €15 billion. CapVest repeated the process with Curium, a nuclear medicine specialist, five years after an initial failed sale attempt, valuing the company at $7 billion.
“Once managers have used CVs, they tend to come back to them,” said Alexandre Armbruster, Head of Private Equity and Infrastructure Funds at Caisse des Dépôts. “It solves the issue of cash distributions demanded by certain LPs.”
Rising tension and growing unease
Yet the rapid rise of continuation funds is fueling unease across the industry. Some high-profile cases have ended badly. In late 2024, Hoonigan, an auto parts supplier owned by Clearlake, filed for bankruptcy. Earlier, United Site Services, a portable sanitation company backed by Platinum Equity, required a $1.4 billion rescue package involving investors such as Ares, Fortress, and Blackstone—despite earlier promises of a “win-win” CV structure.
“No one wants to be handed the rotten apple,” said one investor, reflecting fears that weaker assets are being quietly parked in continuation vehicles.
Legal disputes and conflict-of-interest concerns
The model has also triggered legal challenges. Abu Dhabi-based Adic sued Energy & Minerals over the transfer of Ascent Resources into a CV, arguing the asset was undervalued at $5.5 billion and could have fetched $7 billion in a traditional sale. Adic claims it was forced into a “Hobson’s choice”—either sell at a discount or reinvest under unfavorable terms.
“Some managers treat LPs like banks they can swap out when convenient,” complained one institutional investor. “They forget who owns the house they live in.”
Criticism has also targeted firms such as Triton, accused of quickly reselling assets at higher valuations shortly after parking them in continuation vehicles.
‘Manageable’ conflicts—or structural flaw?
Industry opinions remain divided. “CVs are neither good nor bad. They’re a tool—and they’re here to stay,” said Armbruster. He argues that conflicts of interest can be mitigated through competitive bidding, independent valuations, and priority reinvestment rights for existing LPs.
Marion Cossin agrees that conflicts exist but insists they are manageable if properly structured. Still, some institutional investors are walking away. The Alaska Permanent Fund has reduced its exposure, with its chief investment officer calling CVs “a sign of decay in private equity.” Others, including the Teacher Retirement System of Texas, prefer managers who avoid them altogether.
Forced exits and long-term risks
For many LPs, continuation vehicles amount to forced sales. Limited internal resources, tight timelines, and allocation constraints often prevent investors from reinvesting—even when they believe in the asset’s long-term value.
“If the process is poorly managed, it becomes a short-term fix with long-term consequences,” Armbruster warned. “Disappointed investors won’t commit capital to the manager’s next fund.”
Critics also accuse managers of chasing easy carried interest, inflating assets under management and fees through self-dealing. While managers often reinvest their carry, the perception of misaligned incentives persists.
Some firms are choosing to stay clear. “Our job is to buy and sell—and I prefer to do it cleanly,” said the head of a major private equity group.
FAQs
What are continuation vehicles (CVs)?
Continuation vehicles are funds created by private equity managers to hold assets transferred from existing funds, allowing managers to delay exits while offering liquidity to some investors.
Why are CVs booming in private equity?
They have surged due to frozen exit markets, valuation gaps, and pressure from institutional investors seeking cash distributions.
Are continuation vehicles risky for investors?
They can be. Critics point to conflicts of interest, forced exits, and cases where assets later underperform or fail.
Do all investors support CVs?
No. While some see them as a useful tool, others view them as a sign of structural stress in private equity and are reducing exposure.
Will CVs remain a permanent feature of the market?
Most experts believe so—but with increased scrutiny, tighter governance, and more cautious investors.
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