Key Takeaways
- • Continuation vehicle transactions have exploded to over $100bn globally in 2025, up 43% from $70bn in 2024 and a 14x increase from $7bn in 2015, now representing roughly 20% of private equity exits.
- • Large institutional investors—including sovereign wealth funds and US public pension schemes—are raising governance concerns over limited partner advisory committee (LPAC) approvals where committee members' organizations may simultaneously invest on the buy side of the same transactions, creating undisclosed conflicts of interest.
- • Governance frameworks have failed to keep pace with market growth; some LPACs are composed of concentrated groups of fund backers, raising questions about whether broader LP consent should be required before assets transfer into continuation structures.
- • The core conflict centers on whether LPAC participants can impartially approve transactions when their own organizations benefit from secondary strategies or continuation vehicle exposure, particularly where dual exposure across traditional buyout and secondary funds exists.
Summary
Continuation vehicle transactions—mechanisms used by general partners to transfer portfolio companies from mature funds into new investment structures—have emerged as a governance flashpoint for institutional capital providers. According to the Financial Times, large allocators are increasingly questioning whether conflicts of interest are being adequately managed when LPs serving on advisory committees approve transactions that may indirectly benefit other divisions of their own organizations.
The market has grown substantially. Continuation vehicle transactions reached over $100bn globally in 2025, compared with approximately $70bn in 2024 and less than $7bn in 2015. These structures now account for roughly 20% of private equity exits, underscoring their centrality to the modern PE exit landscape. However, the rapid expansion of the market has outpaced corresponding evolution in governance frameworks, creating structural gaps between deal volume and oversight infrastructure.
The specific concern articulated by major institutional investors centers on dual conflicts. Sovereign wealth funds and US public pension schemes have flagged instances where LPAC members—whose organizations maintain exposure across both traditional buyout funds and secondary strategies—are approving continuation vehicle transactions that simultaneously benefit their own firms' secondary or continuation vehicle investments. This dual positioning creates an inherent misalignment between fiduciary duty to the original fund's LPs and the committee member's organizational interests in the continuation structure.
Additional governance friction emerges from LPAC composition. Several large allocators have noted that committee participation in some processes is concentrated among a small subset of fund backers, potentially limiting the diversity of perspectives and raising questions about whether broader LP consent should be required before assets transfer into continuation structures. These concerns suggest that existing approval processes may not adequately reflect the sophistication and scale of potential conflicts in an environment where continuation vehicles have become material components of PE exit strategies.
The market has grown substantially. Continuation vehicle transactions reached over $100bn globally in 2025, compared with approximately $70bn in 2024 and less than $7bn in 2015. These structures now account for roughly 20% of private equity exits, underscoring their centrality to the modern PE exit landscape. However, the rapid expansion of the market has outpaced corresponding evolution in governance frameworks, creating structural gaps between deal volume and oversight infrastructure.
The specific concern articulated by major institutional investors centers on dual conflicts. Sovereign wealth funds and US public pension schemes have flagged instances where LPAC members—whose organizations maintain exposure across both traditional buyout funds and secondary strategies—are approving continuation vehicle transactions that simultaneously benefit their own firms' secondary or continuation vehicle investments. This dual positioning creates an inherent misalignment between fiduciary duty to the original fund's LPs and the committee member's organizational interests in the continuation structure.
Additional governance friction emerges from LPAC composition. Several large allocators have noted that committee participation in some processes is concentrated among a small subset of fund backers, potentially limiting the diversity of perspectives and raising questions about whether broader LP consent should be required before assets transfer into continuation structures. These concerns suggest that existing approval processes may not adequately reflect the sophistication and scale of potential conflicts in an environment where continuation vehicles have become material components of PE exit strategies.
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