Continuation Funds Reshape the PE Exit Landscape in 2026

GP-led secondary transactions reached $76 billion in 2025, according to Evercore data, with single-asset continuation vehicles comprising the largest share at $32 billion. The mechanism — in which a GP transfers one or more portfolio companies from an older fund into a new vehicle — has become the preferred exit route for firms holding high-conviction assets they believe have further upside.

Why Continuation Funds Are Surging

Three factors are driving the trend. First, the IPO market remains selective, limiting traditional exit options for many portfolio companies. Second, strategic M&A activity, while recovering, has not returned to pre-2022 levels. Third, GPs are increasingly reluctant to sell top-performing assets at valuations they consider below intrinsic value.

"A continuation fund allows you to crystalize returns for existing LPs while maintaining ownership of a business you understand deeply," explained Jeffrey Aronson, co-managing principal at Centerbridge Partners. "It's a win-win when structured properly."

LP Pushback on Governance

However, not all stakeholders are enthusiastic. ILPA released updated guidelines in November 2025 specifically addressing continuation fund conflicts of interest. Key concerns include the GP acting on both sides of the transaction, the selection of valuation advisors, and the rollover economics offered to existing LPs.

Several large pension funds have begun requiring independent fairness opinions and minimum tender thresholds before approving continuation fund transactions. The Ontario Teachers' Pension Plan recently implemented a policy requiring at least 60% of existing LPs to elect into any continuation vehicle for the transaction to proceed.

Despite these governance debates, market participants expect GP-led volume to exceed $90 billion in 2026, with multi-asset continuation funds growing fastest as GPs seek to restructure entire legacy portfolios.