PE managers push for higher carried interest in continuation deals

Private equity firms are increasingly pursuing enhanced carried interest arrangements on single-asset continuation vehicles, according to a Bloomberg report, as managers seek a larger share of future gains from assets they continue to hold beyond the life of their original funds. The report cites research from PJT Partners showing that "super carry," generally defined as carried interest above the standard 12% to 20% range, appeared in almost a third of new single-asset continuation vehicles launched during the first half of 2026. That proportion is nearly three times the level recorded a year earlier.

The development reflects the growing negotiating power managers can hold over their most sought-after assets, even as much of the industry continues to face difficulties exiting investments and returning capital to limited partners. Continuation vehicles have become a key tool for managers seeking liquidity or extended ownership without selling trophy assets outright, and the terms of these vehicles have become a focal point for negotiations between sponsors and investors.

Parthenon Capital Partners illustrates the dynamic. The firm sought enhanced economics as part of a transaction to extend its ownership of Kroll Bond Rating Agency. Other investors resisted the proposed terms, but HarbourVest Partners ultimately backed the deal, enabling Parthenon to raise more than $1.7bn for the single-asset continuation vehicle.

Super-carry arrangements typically include performance hurdles, so managers receive the additional profit share only if the continuation vehicle delivers sufficiently strong returns. Common thresholds include an internal rate of return of 30%, a three-times multiple on invested capital, or a combination of performance measures. David Perdue, a partner in PJT's strategic advisory group, said such structures can give sponsors an incentive to keep creating value after assets are transferred into continuation vehicles.