As private equity exits remain difficult in an uncooperative market, GPs and LPs alike are frustrated. General partners want the right price for their holdings as a way of resetting the clock on investments and retaining the ones they believe still have upside. Meanwhile, limited partners want to recoup capital.
Rather than force a sale at a discount, more GPs are turning to continuation vehicles as a way of “creating a stopgap” that mitigates the liquidity problem facing investors.
“They’re creating continuation vehicles, and the uptick has significantly outpaced what it has been in the past,” said David Goldstein, director of product and fund services at the $500 billion asset servicing firm STP Investment Services. “I read about a CV almost every day now.”
Recent data from Preqin cited by S&P Global Market Intelligence show that global continuation funds raised nearly $63 billion last year, the highest annual amount since at least 2017. The number of closed continuation funds climbed to 105 in 2025—an eight-year high. Continuation funds raised $11.86 billion across 20 vehicles as of early May.
Allocators and Goldstein have explained what’s driving this. About 15 or 20 years ago, private equity firms bought a company or other asset and would flip it in a couple of years. “But that cycle does not seem to be happening right now,” Goldstein said. Now, “LPs that signed up for a 7- or 10-year fund are at 12, 14 years.”
And that’s too long for many allocators who need cash. But while continuation vehicles are a way for GPs to stop the clock and “clean things up a bit,” Goldstein noted that they pose “a conundrum for LPs: ‘Do we want our money back or do we want to realize the full potential?’”
“If you’ve had your money with a private equity fund 7, 8, 10 years, the chances of a loss ae reasonably small,” Goldstein said. “But are you taking at a gain if they held on?”
But not all allocators think this is that big a conundrum: Paul O’Brien, trustee for the $13 billion Wyoming Retirement System, noted that LPs “have given away a very valuable option” by allowing GPs to choose when to sell portfolio companies.
“They need to see that and price it,” O’Brien added. “How about if a GP had to refund 10 percent of its management fees to the LPs if they don’t get all their money back in 10 years?”
While CVs offer many benefits to GPs, Mark Baumgartner, CEO and CIO of the $8 billion University of Florida Investment Corp., notes that the value proposition for LPs remains a question.
“Continuation vehicles seem to offer multiple benefits to managers, though perhaps fewer for LPs seeking liquidity,” Baumgartner said. “It just reinforces the idea that liquidity is expensive, so it should come as no surprise to LPs who want to exit.”
Because of the current market conditions, Baumgartner expects CVs to continue growing. “Managers will continue to grow their assets under management, and LPs will continue to trade off taking risk in the form of concentration or illiquidity; or in the case of CVs, both,” he said.
