Continuation Funds: Fueling the Rise in Secondaries

Continuation funds are transforming the GP-led secondary market, offering a vital alternative exit route for private equity (PE) firms. These funds allow PE firms to retain high-quality assets beyond the traditional fund term, providing fresh capital for continued value creation. In 2024, continuation funds accounted for 90% of GP-led secondary transactions, reflecting their growing popularity. They offer liquidity to investors in a market with muted exit activity and align incentives for long-term asset management. Despite some challenges, continuation funds are gaining traction as a strategic tool for both mid-market and large-cap sponsors.