Key Takeaways
- • Continuation funds (GP-led secondaries) recorded over $70 billion in transaction volume in 2024, a record year, and now account for 45-50% of all secondary market deal volumes, establishing them as a key growth driver within the $160 billion global secondaries market.
- • The continuation fund market has expanded as private equity investors face prolonged holding periods due to slowdowns in traditional exit activity, creating increased demand for liquidity while allowing general partners to extend ownership of high-quality assets with new institutional capital.
- • The secondary market as a whole reached $160 billion in global transaction volume in 2024, a new annual record, and is positioned for continued strength through 2025, reflecting the maturation and expansion of the private equity market.
- • Continuation funds serve as a compelling exit route for portfolio companies, particularly small and mid-market firms with significant transformational growth potential, enabling sponsors to offer liquidity to existing investors while maintaining operational control and value creation opportunity.
Summary
The continuation fund market has matured into a dominant force within global secondaries, driven by structural pressures reshaping private equity dynamics. According to Schroders Capital, continuation funds—also known as GP-led secondaries—recorded over $70 billion in transaction volume during 2024, a new record, while commanding 45-50% of secondary market deal volumes over the past several years. This growth reflects a fundamental shift in how private equity managers navigate liquidity constraints and portfolio management in an increasingly complex exit environment.
The expansion of continuation funds is directly linked to declining traditional exit activity and distribution rates across the private equity market. Rising inflationary and interest rate pressures have slowed deal and exit velocity, compelling institutional investors to seek alternative liquidity mechanisms. In response, continuation funds have emerged as a strategic tool allowing general partners to simultaneously address LP liquidity demands while extending hold periods for high-performing assets backed by fresh institutional capital. This dual-purpose functionality has positioned continuation vehicles as essential infrastructure within maturing private markets.
The broader secondary market context underscores the scale of this trend. The global secondaries market recorded $160 billion in transaction volume in 2024, representing a new annual record and signaling strong positioning as the market progresses through 2025. This growth trajectory reflects the longer-term maturation and expansion of the private equity ecosystem, where secondary transactions and continuation vehicles have evolved from niche strategies into mainstream capital allocation mechanisms.
Continuation funds remain particularly attractive as exit routes for smaller and mid-market portfolio companies demonstrating significant transformational growth potential. Rather than forcing exits on compressed timelines or accepting valuation discounts, sponsors can retain ownership stakes, extend value-creation timelines, and recycle capital to existing limited partners—effectively bridging the gap between a fund's natural term end and optimal exit windows. As the private markets infrastructure continues to evolve, continuation funds are poised to sustain their growth trajectory as a foundational secondary market instrument.
The expansion of continuation funds is directly linked to declining traditional exit activity and distribution rates across the private equity market. Rising inflationary and interest rate pressures have slowed deal and exit velocity, compelling institutional investors to seek alternative liquidity mechanisms. In response, continuation funds have emerged as a strategic tool allowing general partners to simultaneously address LP liquidity demands while extending hold periods for high-performing assets backed by fresh institutional capital. This dual-purpose functionality has positioned continuation vehicles as essential infrastructure within maturing private markets.
The broader secondary market context underscores the scale of this trend. The global secondaries market recorded $160 billion in transaction volume in 2024, representing a new annual record and signaling strong positioning as the market progresses through 2025. This growth trajectory reflects the longer-term maturation and expansion of the private equity ecosystem, where secondary transactions and continuation vehicles have evolved from niche strategies into mainstream capital allocation mechanisms.
Continuation funds remain particularly attractive as exit routes for smaller and mid-market portfolio companies demonstrating significant transformational growth potential. Rather than forcing exits on compressed timelines or accepting valuation discounts, sponsors can retain ownership stakes, extend value-creation timelines, and recycle capital to existing limited partners—effectively bridging the gap between a fund's natural term end and optimal exit windows. As the private markets infrastructure continues to evolve, continuation funds are poised to sustain their growth trajectory as a foundational secondary market instrument.
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