Are all continuation vehicles created equal?

Not all continuation vehicles are created equal.

When the market for continuation vehicles first emerged around 2018, it began with large-cap sponsors and true trophy assets – deals driven by the desire to hold exceptional businesses longer and double down on their potential.

Since then, the market has expanded into two additional categories.

The first is what we call fund wrap-ups – situations where a private equity fund is 10 to 12 years old and the firm is looking to wind down the vehicle, often with three or four assets remaining. Some are outperforming, some are not, and investors in these transactions are effectively pricing the portfolio as a whole, taking the good with the bad.

The second is mid-life complexity – where a business faces either a significant opportunity or an unexpected disruption. This could be a transformative merger that requires more time, more capital, and careful execution to integrate, optimize, and grow. When the value creation path forward looks meaningfully different from what was originally underwritten, that’s a distinct type of transaction that requires a different lens.

And then there are the trophy assets – great businesses backed by great sponsors — a category that continues to grow and expand beyond large-cap into the middle market.

Three different deal types. One evolving market.