Key Takeaways
- • GP-led secondary market reached $103 billion in volume during H1 2025, with $47 billion attributed to GP-led transactions, according to Jefferies Semi-Annual Secondary Market Review, signaling sustained momentum in alternative exit strategies as dealmaking slumps persist.
- • Private equity firms are implementing "CV-squared" strategies—rolling assets from first-generation continuation vehicles into second-generation continuation vehicles—as an extension of the continuation vehicle model that gained prominence during the Covid pandemic.
- • Global secondary transaction volume surged to $152 billion in 2024, a 39% increase from 2023, with Lazard forecasting volumes to reach $172 billion in 2025, demonstrating robust market expansion despite macroeconomic uncertainty.
- • Investor scrutiny is intensifying on returns, fees, and exit routes across continuation vehicles, with concerns mounting over "quasi-zombie" funds and the viability of multi-stage CV structures in narrowing exit windows.
- • CV-squared transactions introduce compounding complexity: assets held across multiple continuation vehicle generations may grow to $10 billion-plus in size by the time a second CV exits, significantly constraining potential acquirers and limiting exit optionality.
Summary
The private equity secondary market is witnessing a structural shift as general partners increasingly deploy continuation vehicles in successive generations—a practice termed "CV-squared"—to extend asset lifecycles amid prolonged dealmaking constraints. This evolution represents a marked acceleration of strategies that emerged during the Covid-19 pandemic, when buyout firms first began recycling portfolio companies into continuation vehicles rather than pursuing traditional exits or forced sales.
The scale of this activity has become substantial. Jefferies' Semi-Annual Secondary Market Review documented $103 billion in secondary market volume during the first half of 2025, with $47 billion representing GP-led transactions. Looking broader, global secondary market volume reached $152 billion in 2024—a 39% increase from 2023—with Lazard projecting the market will expand to $172 billion in 2025. This growth reflects both structural supply from maturing continuation vehicles and sustained demand from secondaries investors seeking access to quality assets outside traditional fundraising channels.
However, the expansion of CV-squared structures introduces material complications for investors and portfolio management. As assets cycle through multiple continuation vehicle generations, their scale can expand significantly; industry commentary suggests that by the time a second CV exits an asset, the company may have grown to $10 billion-plus in size, a scale that fundamentally narrows the universe of potential acquirers and constrains exit optionality. This dynamic has prompted heightened institutional scrutiny regarding return potential, fee structures across layered continuation vehicle arrangements, and the viability of exit routes within realistic timeframes.
Investor concerns now center on whether certain portfolios constitute "quasi-zombie" funds—vehicles extended repeatedly through continuation mechanisms without achieving meaningful value creation or achieving returns sufficient to justify extended hold periods and compounded fee burdens. These structural challenges reflect the broader secondary market tension between GP optionality (enabled by secondaries mechanisms) and LP confidence in value realization.
The scale of this activity has become substantial. Jefferies' Semi-Annual Secondary Market Review documented $103 billion in secondary market volume during the first half of 2025, with $47 billion representing GP-led transactions. Looking broader, global secondary market volume reached $152 billion in 2024—a 39% increase from 2023—with Lazard projecting the market will expand to $172 billion in 2025. This growth reflects both structural supply from maturing continuation vehicles and sustained demand from secondaries investors seeking access to quality assets outside traditional fundraising channels.
However, the expansion of CV-squared structures introduces material complications for investors and portfolio management. As assets cycle through multiple continuation vehicle generations, their scale can expand significantly; industry commentary suggests that by the time a second CV exits an asset, the company may have grown to $10 billion-plus in size, a scale that fundamentally narrows the universe of potential acquirers and constrains exit optionality. This dynamic has prompted heightened institutional scrutiny regarding return potential, fee structures across layered continuation vehicle arrangements, and the viability of exit routes within realistic timeframes.
Investor concerns now center on whether certain portfolios constitute "quasi-zombie" funds—vehicles extended repeatedly through continuation mechanisms without achieving meaningful value creation or achieving returns sufficient to justify extended hold periods and compounded fee burdens. These structural challenges reflect the broader secondary market tension between GP optionality (enabled by secondaries mechanisms) and LP confidence in value realization.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.