Key Takeaways
- • Continuation vehicles (CVs) represented 19 percent of sponsor-backed exits as of June 2025, nearly doubling their share from 12 percent in 2023 and marking a significant structural shift in private equity exit strategy.
- • The trajectory of CV adoption has accelerated sharply over three years: CVs accounted for just 5 percent of exits in 2020-2021, grew to 12 percent in 2023, 13 percent in 2024, and reached 19 percent by mid-2025.
- • Despite their rising prevalence, some general partners view continuation vehicles as temporary measures rather than permanent exit solutions, signaling potential further evolution in how sponsors approach portfolio liquidity and value realization.
- • The growth in CVs reflects structural challenges in the private equity market, including a prolonged distribution drought that has made traditional exit channels less accessible for sponsors seeking to return capital to limited partners.
Summary
Continuation vehicles have emerged as a material exit mechanism in private equity, capturing nearly one-fifth of all sponsor-backed exits as of June 2025, according to a KPMG study. The data reflects a dramatic acceleration in CV adoption: the exit method represented only 5 percent of transactions in 2020-2021, expanded to 12 percent by 2023, reached 13 percent in 2024, and climbed to 19 percent by mid-2025. This trajectory indicates that CVs are no longer a niche strategy but rather a mainstream component of sponsor exit planning.
The rapid growth of continuation vehicles stems largely from challenging market conditions affecting traditional exit pathways. A prolonged distribution drought in recent years has constrained sponsors' ability to realize liquidity through conventional means, making CVs an increasingly attractive alternative. By rolling assets into a new investment vehicle rather than executing a full exit, sponsors can maintain exposure to portfolio companies while providing some liquidity to existing limited partners—a solution that addresses both GP and LP interests during a constrained exit environment.
However, the KPMG analysis suggests that not all market participants view CVs as a permanent evolution in exit strategy. Some general partners characterize continuation vehicles as "temporary measures," implying that sponsors may shift back toward traditional exits as market conditions normalize and distribution channels improve. This perspective indicates that the current spike in CV usage may partly reflect cyclical market stress rather than a fundamental recalibration of exit preferences, though the consistent quarter-over-quarter growth suggests structural factors are also at play in driving adoption.
The rapid growth of continuation vehicles stems largely from challenging market conditions affecting traditional exit pathways. A prolonged distribution drought in recent years has constrained sponsors' ability to realize liquidity through conventional means, making CVs an increasingly attractive alternative. By rolling assets into a new investment vehicle rather than executing a full exit, sponsors can maintain exposure to portfolio companies while providing some liquidity to existing limited partners—a solution that addresses both GP and LP interests during a constrained exit environment.
However, the KPMG analysis suggests that not all market participants view CVs as a permanent evolution in exit strategy. Some general partners characterize continuation vehicles as "temporary measures," implying that sponsors may shift back toward traditional exits as market conditions normalize and distribution channels improve. This perspective indicates that the current spike in CV usage may partly reflect cyclical market stress rather than a fundamental recalibration of exit preferences, though the consistent quarter-over-quarter growth suggests structural factors are also at play in driving adoption.
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