Key Takeaways
- • Global secondary market volume reached $118bn in H1 2026, up 15% from H1 2025, with GP-led transactions accounting for $62bn, or 53% of total secondary activity, according to figures cited at the Alfi Private Assets Conference.
- • European GP-led deals reached $15bn, roughly 24% of the global GP-led total.
- • James Ravden, partner at Simpson Thacher & Bartlett, said 82 of the top 100 global GPs by assets under management have executed a continuation vehicle transaction.
- • Updated ILPA guidance stresses that disclosure alone is insufficient for continuation fund conflicts; it calls for competitive auctions, unencumbered LPAC structures, and at least 20 clear business days for LP decisions.
- • Continuation vehicles have shifted from ad hoc liquidity tools to a central pillar of private equity exit strategy, with sponsors using them to retain trophy assets beyond standard fund life.
Summary
Private equity sponsors have long relied on initial public offerings, trade sales and sponsor-to-sponsor buyouts to exit investments. According to Leidy Pastas Merchancano, counsel at Arendt & Medernach, valuation gaps, macroeconomic headwinds and tighter financing conditions have narrowed those options for general partners. She made the remarks while moderating a panel at the Alfi Private Assets Conference on 9 November 2026. Tara Walsh, a senior legal consultant, described continuation vehicles as a legitimate "fourth exit" that has moved beyond end-of-life remedies for legacy assets.
Market data presented at the conference shows the scale of the shift. Global secondary market volume reached $118bn in H1 2026, a 15% increase over H1 2025. GP-led transactions generated $62bn of that total, or 53% of secondary activity. Europe accounted for $15bn of GP-led deals, about 24% of the global GP-led total. James Ravden, partner at Simpson Thacher & Bartlett, said 82 of the top 100 global GPs by assets under management have completed a continuation vehicle transaction, and that the trend is extending into credit, infrastructure and real assets.
According to Ravden, sponsors pursue continuation funds for commercial reasons beyond providing liquidity to selling investors. GPs primarily seek to retain trophy assets beyond standard fund life limits, enabling buy-and-build strategies, geographic expansion or funding for growth. Continuation vehicles also allow GPs to consolidate complex cap tables by acquiring minority stakes. Panellists stressed that GPs must clearly articulate their exit rationale during harvest periods. Arnaud Delestienne, chief commercial officer at the Luxembourg Stock Exchange, noted that the European Commission's consultation examined whether dedicated trading infrastructure could ease private secondary exits, but he questioned market appetite and said success depends on lowering costs, aiding price formation and preserving company-controlled trading windows.
Because the same sponsor sits on both sides of a continuation fund transaction, it is a related party deal, and fair valuation is the central conflict of interest. Ravden argued best practice requires competitive auctions run through specialist secondary advisory banks with multi-round bidding. Lead secondary investors typically negotiate terms at arm's length through independent counsel. Walsh noted that fairness opinions cannot cure conflicts where the valuer holds retainer-based incentives with the GP, and that any such conflict must be disclosed to LPs.
Updated ILPA guidance emphasises that disclosure alone is insufficient without active conflict management. Limited Partner Advisory Committees exist to opine on GP conflicts rather than negotiate asset prices on behalf of all LPs, Walsh explained. The guidance calls for unencumbered LPAC structures with one vote per member, in-camera sessions without the GP, and positive approvals. It discourages bifurcated remain-in-place options and removes strict demands for 100% carry reinvestment. Sponsors should provide election packs and allow at least 20 clear business days for LP decisions.
US and European continuation fund markets share common themes but differ structurally, Ravden said. US transactions feature higher headline GP commitments because deal-by-deal waterfalls crystallise carry on individual asset sales. European sponsors operate under whole-of-fund waterfalls and demonstrate alignment through flagship vehicle co-investments. Tax treatment also differs: US LPs frequently use tax-deferred roll-overs, while European LPs typically receive net cash distributions that are reinvested as fresh capital.
Market data presented at the conference shows the scale of the shift. Global secondary market volume reached $118bn in H1 2026, a 15% increase over H1 2025. GP-led transactions generated $62bn of that total, or 53% of secondary activity. Europe accounted for $15bn of GP-led deals, about 24% of the global GP-led total. James Ravden, partner at Simpson Thacher & Bartlett, said 82 of the top 100 global GPs by assets under management have completed a continuation vehicle transaction, and that the trend is extending into credit, infrastructure and real assets.
According to Ravden, sponsors pursue continuation funds for commercial reasons beyond providing liquidity to selling investors. GPs primarily seek to retain trophy assets beyond standard fund life limits, enabling buy-and-build strategies, geographic expansion or funding for growth. Continuation vehicles also allow GPs to consolidate complex cap tables by acquiring minority stakes. Panellists stressed that GPs must clearly articulate their exit rationale during harvest periods. Arnaud Delestienne, chief commercial officer at the Luxembourg Stock Exchange, noted that the European Commission's consultation examined whether dedicated trading infrastructure could ease private secondary exits, but he questioned market appetite and said success depends on lowering costs, aiding price formation and preserving company-controlled trading windows.
Because the same sponsor sits on both sides of a continuation fund transaction, it is a related party deal, and fair valuation is the central conflict of interest. Ravden argued best practice requires competitive auctions run through specialist secondary advisory banks with multi-round bidding. Lead secondary investors typically negotiate terms at arm's length through independent counsel. Walsh noted that fairness opinions cannot cure conflicts where the valuer holds retainer-based incentives with the GP, and that any such conflict must be disclosed to LPs.
Updated ILPA guidance emphasises that disclosure alone is insufficient without active conflict management. Limited Partner Advisory Committees exist to opine on GP conflicts rather than negotiate asset prices on behalf of all LPs, Walsh explained. The guidance calls for unencumbered LPAC structures with one vote per member, in-camera sessions without the GP, and positive approvals. It discourages bifurcated remain-in-place options and removes strict demands for 100% carry reinvestment. Sponsors should provide election packs and allow at least 20 clear business days for LP decisions.
US and European continuation fund markets share common themes but differ structurally, Ravden said. US transactions feature higher headline GP commitments because deal-by-deal waterfalls crystallise carry on individual asset sales. European sponsors operate under whole-of-fund waterfalls and demonstrate alignment through flagship vehicle co-investments. Tax treatment also differs: US LPs frequently use tax-deferred roll-overs, while European LPs typically receive net cash distributions that are reinvested as fresh capital.
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