Continuation Funds in U.S. Private Equity: Trans-Atlantic Viewpoints

Continuation funds—single-asset or concentrated vehicles formed by a general partner (“GP”) to purchase one or more portfolio companies from an existing, often aging, fund—have migrated from niche offramps to mainstream exit routes. Continuation funds’ rapid proliferation reflects a private equity landscape defined by increased competition for assets, record dry powder, elongating hold periods, and a buoyant secondary market hungry for yield and governance influence.

Secondary transaction in the United States (the “U.S.”) are rapidly on the rise in recent years. GP-led secondary volume in the U.S. expanded from roughly $9 billion in 2016 to about $87 billion in 2024, a ~33% compound annual increase.[1] Further underscoring the accelerating storyline, half-year 2025 volume reached $47 billion, expanding ~68% compared to the first half of 2024,[2] and continuation funds accounted for over 80% of this segment.[3] Some estimates suggest that more than 40% of U.S. buyout exits in 2023 involved a continuation vehicle,[4] and that 84% of all GP-led deal volume in 2024 involved a continuation vehicle.[5] Notably, blue-chip sponsors have embraced the model: in August 2025 TPG Twin Brook Capital Partners, the middle-market direct lending platform of TPG Inc. (NASDAQ: TPG), and Coller Capital, the world’s largest dedicated private market secondaries manager, closed a $3 billion credit-focused continuation vehicle, marking the largest completed transaction of its kind to date in the private credit secondaries market; [6] and in early 2025, Vista Equity Partners raised a record $5.6 billion continuation fund to sell a large existing stake in IT firm, Cloud Software Group.[7] The participation of these major industry players enhances the legitimacy of this budding concept and signals a durable shift in exit mechanics for global asset managers.

For limited partners (“LPs”), especially those based in Europe, U.S.-based continuation funds are becoming increasingly relevant. Euro-denominated investors seeking U.S. exposure may achieve it with reduced blind-pool risk: the target asset is already known, diligenced, and often seasoned under the same GP. Moreover, continuation funds frequently offer co-investment strips and preferential economics to rollover LPs, affording institutional investors—such as European insurers constrained by Solvency II—tailored duration and fee profiles aligned with liability management strategies. These continuation vehicles also create secondary liquidity for existing LPs, who may elect to sell into the transaction while preserving an option to reinvest on updated terms.

However, despite the recent spotlight, hurdles persist: in particular, European participation in this trend triggers the Alternative Investment Fund Managers Directive (“AIFMD”), the Sustainable Finance Disclosure Regulation, and, post-Brexit, potential U.K. National Security and Investment Act filings. Disclosure thresholds, marketing rules, and cross-border tax leakage can elongate timelines, especially relative to the predominantly Delaware-domiciled, U.S.-investor market. Additionally, ERISA considerations, while familiar to U.S. sponsors, intersect awkwardly with European pension governance norms. Furthermore, conflicts of interest—given that the GP typically sits on both sides of a given deal—invite heightened European regulatory scrutiny. These factors, among others, can elevate diligence costs and compel European LPs to negotiate enhanced information rights, independent fairness opinions, and stricter key-person covenants.

In summary, continuation funds have evolved from opportunistic solutions to integral components of the U.S. private equity toolkit. Their propagation, endorsement by marquee sponsors, and bespoke advantages for liability-sensitive capital indicate continued growth. Nevertheless, trans-Atlantic investors must navigate divergent regulatory regimes and valuation complexities to harness the strategy’s promise.

[1] Jefferies, Global Secondary Market Review (Jan. 2025).

[2] Jefferies, Global Secondary Market Review (July. 2025).

[3] Id.

[4] PitchBook, 2023 U.S. PE Annual Report (Jan. 2024).

[5] Jefferies, Global Secondary Market Review (July. 2025).

[6] Morningstar, “TPG Twin Brook Closes $3 Billion Continuation Vehicle Led by Coller Capital” (Aug. 12, 2025).

[7] Financial Times, “Private equity firms flip assets to themselves in record numbers” (July. 2025).