How I Invest with David Weisburd
E311: How Continuation Vehicles Quietly Reshaped Private Equity
24 Feb 2026
Chapter 1: Why are continuation vehicles gaining popularity in private equity?
So, Ben, you help lead the 90 person secondaries team at Jefferies, which is largely focused on the continuation vehicle space today. Why is there such a focus on continuation vehicles today?
Well, continuation vehicles represent one of the fastest growing and probably most innovative parts of the private markets. They will be announced in the next week or so north of $110 billion of continuation vehicle volume in 2025. That's a second record year in a row for the market and up quite significantly from where we were in 2024 at about $75 billion in continuation vehicle volume.
Is there an 80-20 aspect to this $110 billion where there's a few firms driving the majority of that behavior?
It's quite broadly distributed amongst a variety of not just mid-market, large cap, smaller cap buyout focus firms, but venture capital firms. Are these $20 million vehicles, $200 million vehicles? The general market is around a half billion dollars of size for an individual continuation vehicle with the range between $100 million to $5 billion.
The companies that are being involved, contributed to continuation vehicles are companies that can be $50 million of EBITDA or $500 million of EBITDA. There's definitely a strong cohort of mid-market companies that are being targeted by continuation vehicles, but we're also seeing continuation vehicles for pre-IPO VC darlings as well, the Stripes and Databricks and Anthropix of the world.
And I want to get into, in a little bit, deconstructing what a typical continuation vehicle deal looks like. But first, why this trend for continuation vehicles Why has there been such an increase in volume over the last couple of years?
It's a confluence of factors that is driving the category forward and really up and to the right these last couple of years. What continuation vehicles do at their core is help sponsors manage portfolio companies that are not necessarily well timed to the 10-year closed-end private equity fund lifecycle.
You know, the five-year hold period that you oftentimes hear private equity firms talk about.
One of the hardest things of investing is seeing what's shifting before everyone else does. For decades, only the largest hedge funds could afford extensive channel research programs to spot inflection points before earnings and to stay ahead of consensus. Meanwhile, smaller funds have been forced to cobble together ad hoc channel intelligence or rely on stale reports from sell-side shops.
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Chapter 2: What factors are driving the record volume of continuation vehicles?
And that's just been the established practice versus a CV allows you to keep your winners and to continue compounding those winning assets with this asymmetric information where GPs are able to know what's exactly the company that they're buying.
That's exactly why the market has accelerated as it has. And the solution, the continuation vehicle market is looking to provide. There's obviously a lot of friction that happens when a company is sold and a board changes over and a management team is reintroduced to, or introduced rather, to new owners, potentially replaced.
You know, there are a lot of private equity owned businesses that have established growth plans and a playbook that's really working, be it organic or inorganic trajectories. And continuation vehicles just allow sponsors to have more time and capital to prosecute those already working strategies.
Last time we chatted, you were very frank with me and told me some LPs like continuation vehicles, some dislike it. Most actually hold both opinions at once. They have this cognitive dissonance. Why do LPs like continuation vehicles and at the same time don't like those same vehicles?
Continuation vehicles are a pretty steady source of liquidity and not just liquidity, but cash liquidity for LPs. So about A little bit shy of 20% of all private equity distributions in 2025 are happening via continuation vehicle transactions. So check one for LPs who haven't seen a lot of liquidity. They also allow LPs to compound winners.
in their portfolio and keep that capital invested over time versus see one sponsor sell a company to another sponsor and maybe in their exact same roster of managers. And quite often, LPs are committing capital to secondary funds and continuation vehicle focused funds because they see them as a
as a gateway to getting access to really high quality companies featuring superior transaction dynamics and alignment dynamics with both sponsors who are supporting the continuation vehicles as well as management teams at the portfolio companies underneath of them. Now, there is some cognitive dissonance to your point because continuation vehicles have created a portfolio management
consideration and motion, frankly, that didn't exist for many LPs 10 years ago. If you were an LP with 100 different line items in your primary fund roster 10 years ago, then you may see one continuation vehicle election in your entire roster of managers. Going back to the stat that I shared that continuation vehicles are representing 15 to 20% of all private equity exits,
You're now looking at a dozen plus LP elections in your portfolio.
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Chapter 3: How do continuation vehicles address structural mismatches in fund lives?
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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. And LPs need to feel like it's truly an option for them to be able to do exactly just that.
So that rollover option is a particularly important leg of the stool for these transactions full stop.
Do you have LPs that are rolling some and taking some chips off the table? Yeah. That's kind of a best practice?
Typically, we see LPs either take full liquidity or roll over their entire position in a CB, but You know, you'll have a host of LPs that go in either direction. And you do have a bunch of LPs that also say, gosh, I'd love to take my cost basis back, but I can probably roll the rest.
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Chapter 4: What mixed views do LPs and GPs have on continuation vehicles?
And some of those are particularly focused on different sectors, such as software and tech enabled services, businesses, and some of them are are profiling more like large cap buyout funds that see continuation vehicles as an extension of established power rallies.
There's also a host of, I would say, the largest global capital allocators that are profiling as LPs kind of powering the private equity ecosystem. So the large US pensions, the Canadian pensions, the Middle Eastern and East Asian sovereigns. that you're seeing as frequent LPs and direct investors in companies, those groups are responsible for a lot of the demand for continuation.
It kind of solves their problems of how do we deploy a lot of capital per transaction and not be adversely selected because you have the GPs underwriting, you have existing LPs rolling, but yet these deals are enormous.
1,000%. For those LPs that are very keen on co-investment, opportunities with their sponsor partners, continuation vehicles are just another way to go about exactly that and buy companies really in partnership with their existing relationships.
And so interesting that Jeffries has this within the secondaries group. Not everybody has it that way, but it also solves kind of this J curve issue. And there's a big trend in the alternatives world in general. People want to see non-blind pool opportunities. People don't want to be in these long firms, long-term funds.
They want to invest in opportunities that have maybe a three to seven year window versus a 10 plus 10. plus two, three-year window as well. So it also fits into this interesting trend of direct opportunities, non-blind pool opportunities, shorter hold times, reduced JCO.
You could make the argument that continuation vehicles are bringing assets closer and funded identifiable opportunities closer to LPs versus the more nebulous blind pool fund opportunities from 10 or 20 years ago.
I'm going to put you on the spot with kind of on the buyout side, there's a lot of top-down research, a lot of underwriting. You mentioned this operational plan, but you also work on venture. Are these opportunities being done in the open eyes, anthropic stripe of the world as well? And if so, how do those deals differ from a traditional buyout?
The answer is yes, they are being done in that cohort of pre-IPO pre IPO name and the rationale for venture capital and growth managers considering a continuation vehicle is usually a bit distinct from a buyout sponsor thinking about a single asset continuation vehicle. And I say that because the
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