Key Takeaways
- • Continuation funds (GP-led secondaries) recorded over $70 billion in transaction volume in 2024, a new annual record, while commanding 45-50% of secondary market deal volumes over the past several years.
- • The global secondaries market reached $160 billion in total transaction volume in 2024, positioning the sector for continued strong growth through 2025, driven by decreased exit activity and increased liquidity demand from private equity investors.
- • Continuation funds enable private equity managers to simultaneously provide liquidity to existing investors while extending hold periods on high-quality portfolio assets backed by new capital, reshaping traditional exit mechanisms.
- • The expansion of continuation funds reflects the maturation and evolution of the private equity market, where inflationary and interest rate pressures have constrained deal and exit activity, creating demand for alternative liquidity solutions.
- • Continuation funds are emerging as a compelling exit route for portfolio companies, particularly small and mid-market firms with significant transformational growth potential that may not be suited for conventional IPO or trade sale exits.
Summary
The continuation fund market has evolved from a crisis-era workaround into a dominant segment of the private equity landscape, accounting for nearly half of all secondary market deal volumes. According to Schroder Investment Management, continuation funds—also known as GP-led secondaries—recorded transaction volumes exceeding $70 billion in 2024, establishing a new annual record. This growth reflects broader structural shifts in private markets, where the slowdown in traditional exit activity has intensified demand for alternative liquidity mechanisms.
The secondary market as a whole has demonstrated robust expansion, reaching $160 billion in global transaction volume during 2024. This milestone underscores the market's maturation alongside the broader private equity ecosystem. Continuation funds represent the fastest-growing component within secondaries, having captured 45-50% of deal volumes consistently over recent years. The sustained strength of this segment is positioned to continue through 2025, supported by favorable market dynamics.
The primary driver of continuation fund adoption is the structural challenge facing private equity investors: a notable decline in distributions and traditional exit opportunities. Inflationary pressures and elevated interest rates have constrained deal and exit velocity across private markets, creating a liquidity gap for fund investors seeking capital repatriation. Continuation funds address this gap by enabling general partners to refinance or extend hold periods on portfolio companies while simultaneously providing limited partners with liquidity events and potential upside participation in future value creation.
Continuation funds function as vehicles through which GPs acquire specific assets—or portfolios of assets—from existing funds, backed by fresh capital from new or existing investors. This structure is particularly valuable for small and mid-market portfolio companies with substantial transformational growth potential that may not command conventional exit channels such as IPOs or strategic sales. By preserving high-quality assets within proprietary platforms while refreshing the capital structure, continuation funds offer flexibility that traditional exit mechanisms cannot provide in the current market environment.
The evolution of continuation funds from a specialized liquidity tool into a mainstream market mechanism reflects the increasing sophistication of private markets infrastructure and the structural demand for alternative solutions in a period of constrained traditional exits.
The secondary market as a whole has demonstrated robust expansion, reaching $160 billion in global transaction volume during 2024. This milestone underscores the market's maturation alongside the broader private equity ecosystem. Continuation funds represent the fastest-growing component within secondaries, having captured 45-50% of deal volumes consistently over recent years. The sustained strength of this segment is positioned to continue through 2025, supported by favorable market dynamics.
The primary driver of continuation fund adoption is the structural challenge facing private equity investors: a notable decline in distributions and traditional exit opportunities. Inflationary pressures and elevated interest rates have constrained deal and exit velocity across private markets, creating a liquidity gap for fund investors seeking capital repatriation. Continuation funds address this gap by enabling general partners to refinance or extend hold periods on portfolio companies while simultaneously providing limited partners with liquidity events and potential upside participation in future value creation.
Continuation funds function as vehicles through which GPs acquire specific assets—or portfolios of assets—from existing funds, backed by fresh capital from new or existing investors. This structure is particularly valuable for small and mid-market portfolio companies with substantial transformational growth potential that may not command conventional exit channels such as IPOs or strategic sales. By preserving high-quality assets within proprietary platforms while refreshing the capital structure, continuation funds offer flexibility that traditional exit mechanisms cannot provide in the current market environment.
The evolution of continuation funds from a specialized liquidity tool into a mainstream market mechanism reflects the increasing sophistication of private markets infrastructure and the structural demand for alternative solutions in a period of constrained traditional exits.
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.