Benjamin Carper

The most common mechanism is for a sponsor to hire an advisor to run an auction process really focused on continuation vehicle investors that would bid for the asset and submit term sheets for a continuation vehicle opportunity.

These are a host of both

traditional secondary investors, as well as a variety of new entrants that historically were not focused at all on continuation vehicle investments and are now raising dedicated strategies focused on the segment.

So

That's one of the ways that these transactions are priced is via this M&A like auction process.

But instead of targeting financial sponsors and strategics, you're really focused on these continuation vehicle investors.

The other way is as part of a equity recapitalization of a business that is led by another financial sponsor.

Yeah, that's right.

So at the larger sizing end of the spectrum, the $5 to $10 to $15 to $20 billion TEV companies that are private equity-owned,

Quite frequently, you'll see two, three different private equity firms, as well as large institutional investors become direct owners of those companies.

So company went from a billion dollars to $5 billion owned by the same sponsor.

Now that sponsor has a lot of equity to be parted with as it's thinking about an exit.

It may bring in another sponsor for a billion dollars at that $5 billion valuation.

leaving quite a lot of unrealized value that they continue to hold.

The continuation vehicle in that instance could be used to monetize that residual stub that they weren't able to get liquidity on at that $5 billion valuation.

That's maybe about a quarter of the continuation vehicle market.

Again, the vast majority of these transactions are being priced by auctions targeting CB investors.

Yeah, continuation vehicles are...

are really predicated on a rollover option for LPs, a flexible rollover option for LPs.

This is a great option for LPs to either take liquidity or to continue to compound a position that already exists and is performing quite nicely.