A continuation fund, also known as a continuation vehicle, is a specialised investment structure used in private equity and venture capital. It allows a GP to transfer one or more portfolio assets from an existing fund into a new fund vehicle. This enables GPs to extend the holding period for high-performing assets beyond the original fund’s lifecycle whilst providing liquidity options for existing LPs.What is a continuation vehicle?
Traditional fund structures create timing conflicts. Private equity and venture capital funds typically have 10-year lifespans. As a fund nears its end, GPs must either exit companies or seek more time to maximise value. Continuation funds solve this by creating a new vehicle that acquires assets from the existing fund.
Existing LPs can choose to roll their interests into the new vehicle or take liquidity by selling their stakes. New investors can participate in the continuation fund, often at valuations reflecting current market conditions. The GP gains time to execute their strategy whilst meeting LP liquidity needs.
Single-asset vs multi-asset continuation funds
Continuation funds fall into two categories: single asset and multi-asset.
- Single asset continuation vehicles transfer one high-conviction portfolio company into a new fund, allowing focused exposure and extended value creation.
- Multi-asset continuation funds transfer several companies, offering diversification while extending hold periods.
Single asset structures are particularly popular for assets the GP believes still have significant unrealised value. Rather than selling at an inopportune time, the GP creates a vehicle that lets believers in the asset’s potential maintain exposure, whilst providing liquidity to others.
Multi-asset continuation funds are often used when several portfolio companies face similar timing considerations or market conditions. By transferring multiple assets into a new vehicle, GPs can extend value creation across part of the portfolio whilst offering diversification to participating investors.
The choice between single and multi-asset structures often reflects portfolio composition, valuation dynamics, and LP appetite for concentration risk.
Why GPs use continuation vehicles
Continuation funds serve strategic purposes beyond just time extension. High-quality assets may need more time to reach full potential, or market conditions may not favour an exit. GPs may also have a clear path to increasing value with more capital and time.
These vehicles also demonstrate conviction. As Wouter Gort, Partner at Hummingbird Ventures, notes: "Venture capital is a long game. Success is highly correlated with vintage years." Continuation funds let GPs extend exposure to those high-performing vintages.
However, continuation vehicle transactions create significant administrative complexity. GPs must manage valuation, negotiate terms with LPs, transfer assets, and allocate carried interest—all requiring robust infrastructure.
Operational complexity of continuation vehicles
Operationally, continuation funds are among the most complex transactions managers undertake. The process includes setting asset valuations, informing LPs, coordinating with new investors, managing carry allocations, handling multiple closings, and ensuring compliance across structures and jurisdictions.
AB Capital, a bunch client managing over €70M across multiple funds, highlights the importance of integrated systems. After consolidating operations, they achieved 50% faster processing and saved over four hours daily on reporting. As Sam Vermeulen, Senior Associate, explains: "Having everything in one portal means LPs immediately see their tasks and data across funds. It gives them clarity—and gives us comfort."
Fund accounting becomes significantly more complex. Managers must maintain separate books for the original and continuation funds while properly allocating historical performance. Carry calculations may crystallise in the original fund and restart in the new one.
Documents involved in continuation transactions
Continuation vehicle transactions require extensive coordination across legal, operational, and investor workflows. Managers typically prepare and distribute multiple transaction documents, including:
- Investment committee memoranda (IC memos) outlining the rationale for transferring assets.
- LP election notices allowing investors to choose between liquidity or rolling into the new vehicle.
- Valuation materials and fairness opinions supporting transaction pricing.
- KYC and onboarding documentation for new investors and rolling LPs entering the continuation vehicle.
Managing these materials across multiple stakeholders and timelines adds significant administrative complexity to GP-led secondary transactions.
LP considerations in continuation vehicles
For LPs, continuation funds present both opportunity and decision points. Those who believe in the asset’s future can roll their position into the new vehicle without committing additional capital. Others can opt for liquidity.
LPs assessing continuation options typically prioritise transparency: access to current performance data, clear terms, visibility into valuations and new investors, and a clear understanding of potential outcomes. ABCapital has found that consolidating investor reporting, capital call workflows and documentation into a unified LP portal improves clarity across its investor base, enabling faster communication and more efficient decision-making.
LP decision factors in continuation funds
When evaluating whether to roll into a continuation vehicle or take liquidity, LPs typically assess several key elements of the transaction:
- Valuation process: Independent valuations, fairness opinions, and how pricing reflects market conditions.
- Fees and carried interest reset: Whether management fees change or carried interest crystallises and resets in the new vehicle.
- Liquidity options: Available exit pricing, rollover mechanics, and timelines for investor elections.
- Governance and alignment: Voting rights, conflicts management, and protections for existing investors relative to new capital entering the structure.
Clear access to performance data, transaction materials, and investor communications remains essential for enabling informed LP decisions.
Continuation vehicles vs. secondary market
Continuation vehicles are a form of GP-led secondary transaction, distinct from LP-led secondaries. In LP-led secondaries, an LP sells its fund stake to a third-party buyer. In continuation vehicles, the GP initiates the transaction, creates a new fund, and transfers assets into it.
Operationally, the difference matters. LP-led secondaries involve stake transfers with no structural changes. Continuation vehicles involve creating a new structure, transferring assets, managing rollovers, and onboarding new investors.
The future of continuation vehicles
As companies stay private longer, continuation vehicles are expected to grow. They offer optionality for GPs and LPs alike. The real challenge is not whether they’ll remain relevant, but whether managers have the infrastructure to execute them effectively.
As Wouter Gort adds: "A clean CRM, efficient workflows, and a centralised clean data hub for accurate reporting are key to having good infrastructure." That’s especially critical when managing multiple structures, investor elections, and carry allocations.
The most sophisticated GPs understand that continuation vehicles require operational excellence. The ability to execute complex, multi-party transactions while maintaining LP trust and compliance will define which fund managers can successfully use these vehicles as part of their strategy.
