- Private equity firms are increasingly using continuation vehicles in 2025, with these self-sales now accounting for about 20% of exits by value.
- The value of such transactions is projected to reach roughly USD 100–107 billion in 2025, up from around USD 70 billion in 2024, amid a backlog of USD 3 trillion in unsold assets.
- This shift reflects weak IPO and M&A markets, as firms seek ways to return capital while retaining control of prized portfolio companies.
- The boom in continuation vehicles is drawing scrutiny over potential conflicts of interest, opaque valuations, and whether limited partners are being fairly treated.
Read More
Private equity firms are increasingly relying on continuation vehicles in 2025 — structures in which a fund-manager sells a company from an older fund to a new fund also managed by the same GP. The rise to ~20% of all PE exits using this mechanism reflects deep pressure on conventional exit routes. With IPO windows narrowing and corporate M&A less reliable amid macroeconomic strain, continuation vehicles provide a way to:
- Return cash to LPs in older funds without involving third-party buyers.
- Continue managing and earning fees on high-quality assets while extending horizons to generate additional value where exit timing is unfavorable.
The fiscal magnitude is large: ~USD 41 billion of continuation-led exits in H1 2025 (~19% of sales) versus lower levels in 2024 [3][4], scaling toward about USD 100–107 billion annually [1]. The persistence of USD 3 trillion in unsold portfolio company value underscores how constrained traditional exit paths remain [3][4].
From a strategic perspective, PE managers are recalibrating their portfolio strategies. They are accelerating exits for strong performance assets, reducing hold periods for certain investments, and leveraging alternative liquidity mechanisms. PitchBook data shows 13% of PE-backed exits in 2025 involved companies held for less than three years, up from 11% in 2024 [5].
However, these maneuvers raise serious governance questions. LPs may face unclear valuation methodologies, potential undervaluation in side-by-side buy/sell negotiations, and a general opacity around how deal pricing is set. Regulatory scrutiny is increasing globally. There have already been lawsuits, such as by the Abu Dhabi Investment Council, alleging undervaluation in continuation vehicle transfers [2].
Looking forward, the continuation-vehicle trend may continue unless IPO markets reopen strongly and corporate buyers return in force. For LPs, the risk lies in diminishing returns, eroded trust, and potential regulatory backlash. PE firms may need to adapt to increasing demands for fee compression, valuation transparency, and enhanced oversight.
Supporting Notes
- Continuation vehicles accounted for ~20% of PE sales in 2025, up from 12–13% in 2024 [1][2].
- Projected 2025 sales involving continuation vehicles are USD 107 billion, rising from USD 70 billion in 2024 [1][2].
- In first half of 2025 alone, about USD 41 billion of PE exits came via continuation fund sales, equal to ~19% of all exits by count/value during that period—a 60% increase year-on-year [3][4].
- Private equity firms are sitting on approximately USD 3 trillion in unsold portfolio value globally, underscoring exit bottlenecks [3][4].
- 13% of PE-backed exits in 2025 involved portfolio companies held for under three years, a rise from 11% in 2024, while 25% were assets held for three-to-five years—the highest such rate since 2022 [5].
- A high-profile lawsuit: Abu Dhabi Investment Council sued Energy & Minerals Group over its alleged undervaluation of Ascent Resources in a self-sale involving a continuation vehicle, though the deal was later halted [2].
Sources
- [1] www.ft.com (Financial Times) — December 30, 2025
- [2] www.ft.com (Financial Times) — December 29, 2025
- [3] www.ft.com (Financial Times) — July 23, 2025
- [4] www.privatemarketsinsights.com (Private Markets Insights) — December 2025
- [5] www.mondaq.com (Mondaq / Foley & Lardner) — December 30, 2025