{"concept_id":"ALTSS-SEC-005","slug":"continuation-vehicle","canonical_name":"Continuation Vehicle","acronym":"CV","aliases":["continuation fund","CV"],"kind":"structure","authority":"industry","facets":["VEH","TXN"],"domains":["SECONDARIES"],"display_title":"Continuation Vehicle (CV)","search_aliases":["what is a continuation vehicle","continuation fund private equity","continuation vehicle vs continuation fund","single-asset vs multi-asset continuation vehicle","continuation vehicle status quo option","how continuation funds work"],"one_sentence_definition":"A continuation vehicle (CV) is a new fund, managed by the same GP, that buys assets from an existing fund so the GP can keep managing them beyond that fund's life, with each existing LP electing to sell or roll.","plain_english":"When a fund reaches the end of its life but its manager believes some companies still have room to grow, the manager can set up a new fund to buy them. New investors put up the cash that pays out the existing investors who want to leave. Investors who want to stay move their stake into the new fund, usually on new fee and profit-share terms.","parent_concepts":["gp-led-secondary"],"child_concepts":["single-asset-continuation-vehicle"],"related_concepts":["roll-or-sell-election","fairness-opinion","stapled-secondary","lpac","gp-commitment","carried-interest-carry","fund-term-extension","dpi"],"comparison_concepts":[],"not_the_same_as":[{"slug":"gp-led-secondary","distinction":"The GP-led secondary is the transaction; the continuation vehicle is the fund created to hold the assets. Tender offers and preferred equity are GP-led transactions that need no CV."},{"slug":"fund-term-extension","distinction":"A term extension keeps the assets in the same fund on the same terms, with no sale, no price and no new investors."},{"slug":"secondary-fund","distinction":"A secondary fund is a buyer of secondaries across many managers; a CV is a single-sponsor vehicle that holds assets from that sponsor's own fund."}],"formula_ids":[],"worked_examples":[],"sections":[{"heading":"Structure","paragraphs":["A CV is usually a new limited partnership whose general partner is an affiliate of the existing fund's GP. Its investors are:","- **new investors**: a lead buyer and a syndicate of other secondary buyers, who supply the cash;\n- **rolling LPs**: existing LPs that elect to stay invested; and\n- **the GP**, which commits capital, often partly by rolling carried interest crystallised in the sale.","The CV pays the selling fund the agreed price for the assets. The selling fund distributes cash to LPs that sell, while rolling LPs' share is reinvested in the CV. Many CVs also raise unfunded capital for follow-on investments or add-on acquisitions. The CV has a fresh term, usually with extension options."]},{"heading":"Single-asset and multi-asset vehicles","paragraphs":["A [single-asset continuation vehicle](/glossary/single-asset-continuation-vehicle) holds one company. Buyers underwrite it much like a direct investment, the exposure is concentrated, and the price rests on a single valuation. A multi-asset continuation vehicle holds several companies, which diversifies the buyers' exposure but lets them argue for excluding weaker assets or pricing the pool unevenly. A whole-fund restructuring is the extreme case, moving all remaining assets."]},{"heading":"Economics","paragraphs":["CV terms are set with the lead buyer and vary by deal. In practice, the [management fee](/glossary/management-fee) is often lower than in the original fund and charged on invested capital or NAV; [carried interest](/glossary/carried-interest-carry) is often tiered, with higher rates only above stated return or multiple hurdles; and buyers expect a substantial [GP commitment](/glossary/gp-commitment). Transaction expenses are allocated by the documents. Where a status-quo option is offered, LPs that choose it keep their original economics on the rolled amount."]},{"heading":"Roll, sell or status quo","paragraphs":["Each existing LP receives election materials and chooses to sell for cash at the transaction price, roll into the CV on its terms, or, if offered, roll on its existing terms. The documents set the election period and the default for LPs that do not respond (see [roll-or-sell election](/glossary/roll-or-sell-election)). Guidance published in 2023 by the Institutional Limited Partners Association (ILPA) identified the absence of a true status-quo option, unrealistic timelines and incomplete disclosure as recurring LP concerns."]},{"heading":"Governance and conflicts","paragraphs":["The GP is effectively on both sides: it manages the selling fund and the buying vehicle and may earn carry on the sale as well as fees and carry in the CV. Protections in common use are a competitive process to select the lead buyer; a fairness or valuation opinion on the price (see [fairness opinion](/glossary/fairness-opinion)); review by the [LPAC](/glossary/lpac), whose consent the limited partnership agreement (LPA) often requires for affiliated transactions; disclosure of the GP's economics, the bids received and the adviser's role; and adequate time to decide. In the US the opinion is market practice and, as of 2 October 2026, no rule of the Securities and Exchange Commission (SEC) requires it: the SEC rule that would have mandated it was vacated in June 2024 (regulatory detail under [GP-led secondary](/glossary/gp-led-secondary)). A sale to a CV in which existing investors are offered the choice to sell or to exchange their interests for interests in the CV is nonetheless an adviser-led secondary transaction as Form PF defines it, which private equity fund advisers filing [Form PF](/glossary/form-pf) must report within 60 days of the end of the fiscal quarter; a joint proposal by the SEC and the Commodity Futures Trading Commission of April 2026 would eliminate that reporting and had not been adopted as of 2 October 2026. ILPA released a Continuation Fund Disclosure Template on 27 January 2026 and draft replacement CV guidance on 24 June 2026; comments closed on 5 August 2026, and final guidance had not been confirmed by 1 October 2026."]},{"heading":"How buyers underwrite a CV","paragraphs":["Buyers underwrite the assets one by one: business plan, capital needs, leverage, exit routes and timing. They test the price against their own valuation, look for alignment through the GP's commitment and carry structure, and negotiate protections such as tiered carry, caps on fees, and governance rights. In single-asset deals they also weigh concentration risk against the GP's knowledge of the company."]},{"heading":"Reading the old fund's track record","paragraphs":["For the selling fund, the sale to the CV is a realisation at the transaction price and raises its [DPI](/glossary/dpi). Some of that cash comes from new investors buying into an asset the GP still manages, and part of the value is reinvested by rolling LPs and the GP. When comparing a manager's realised track record, analysts identify realisations that came from sales to the GP's own vehicles and look at them separately from exits to third parties."]}],"classification_rules":["A vehicle is a continuation vehicle if it is managed by the same GP or an affiliate, acquires assets from an existing fund of that GP, and existing LPs are offered the choice to sell or roll.","A new vehicle that acquires assets from a different manager's fund is a secondary buyout or portfolio acquisition, not a CV.","Multi-asset vs single-asset depends only on the number of portfolio companies acquired."],"calculation_rules":[],"common_mistakes":["Using \"continuation vehicle\" and \"GP-led secondary\" interchangeably.","Treating realisations from sales to the GP's own CV as equivalent to third-party exits when judging the old fund's track record.","Assuming the CV carries the original fund's terms.","Assuming the price was tested in a broad auction; often the process selects the lead buyer, and the lead buyer then sets the price.","Treating a CV as a red flag in itself, or as fair because LPs can choose; the process, price and disclosure decide."],"edge_cases":["A CV that raises large amounts of new primary capital for acquisitions mixes a secondary with a new fundraise, with separate economics for the new money.","A second CV for an asset already held in a CV resets terms again.","The old fund may keep part of the asset alongside the CV, which turns the deal into a partial or strip sale.","LPs barred from holding the CV interest by their own investment restrictions can only sell."],"external_standard_mappings":[{"standard":"ILPA Continuation Funds: Considerations for LPs and GPs (May 2023)","reference":"Whole document","relation":"related","source_id":"SRC-ILPA-CONTINUATION-FUNDS-2023","note":"Under revision; disclosure template 27 Jan 2026."},{"standard":"Form PF section 6 (SEC)","reference":"Adviser-led secondary transaction event report","relation":"related","source_id":"SRC-US-FR-2023-09775","note":"In force as of 2026-10-02; an April 2026 SEC/CFTC proposal (91 FR 22232) would eliminate section 6."}],"source_ids":["SRC-ILPA-CONTINUATION-FUNDS-2023","SRC-US-COURT-CA5-23-60471","SRC-US-FR-2023-09775","SRC-US-FR-2026-07993","SRC-US-SEC-PFAR-VACATUR-NOTICE","SRC-US-SEC-REL-IA-6383"],"citations":[{"source_id":"SRC-ILPA-CONTINUATION-FUNDS-2023","pinpoint":"Key concerns; LPAC engagement; template (2026-01-27) and draft CV guidance (2026-06-24) notes","supports":"ILPA themes and status","source":{"source_id":"SRC-ILPA-CONTINUATION-FUNDS-2023","title":"Continuation Funds: Considerations for Limited Partners and General Partners","authors":"Institutional Limited Partners Association","publisher":"ILPA","document_type":"guidance","url":"https://ilpa.org/resources-tools/resource-library/continuation-funds-considerations-for-limited-partners-and-general-partners/","year":2023,"publication_date":"May 2023","jurisdiction":"intl","status":"Current but under revision: draft Continuation Vehicle guidance released 24 June 2026, comments closed 5 August 2026; final not yet confirmed","last_verified":"2026-10-01"}},{"source_id":"SRC-US-SEC-REL-IA-6383","pinpoint":"Rule 211(h)(2)-2 (vacated)","supports":"Fairness/valuation opinion requirement that was adopted then vacated","source":{"source_id":"SRC-US-SEC-REL-IA-6383","title":"Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews (final rule), Release No. IA-6383","publisher":"U.S. Securities and Exchange Commission","document_type":"release","url":"https://www.sec.gov/files/rules/final/2023/ia-6383.pdf","publication_date":"Adopted 2023-08-23","jurisdiction":"US","status":"vacated","last_verified":"2026-10-01"}},{"source_id":"SRC-US-SEC-PFAR-VACATUR-NOTICE","pinpoint":"Announcement of 2024-10-31 (vacated rules list incl. 211(h)(2)-2; vacatur 2024-06-05)","supports":"Vacatur scope","source":{"source_id":"SRC-US-SEC-PFAR-VACATUR-NOTICE","title":"Announcement Regarding the Private Fund Advisers Rules","publisher":"U.S. Securities and Exchange Commission","document_type":"guidance","url":"https://www.sec.gov/announcement-regarding-private-fund-advisers-rules","publication_date":"2024-10-31","jurisdiction":"US","status":"current","last_verified":"2026-10-01"}},{"source_id":"SRC-US-COURT-CA5-23-60471","pinpoint":"Decided 2024-06-05","supports":"Vacatur","source":{"source_id":"SRC-US-COURT-CA5-23-60471","title":"National Association of Private Fund Managers v. SEC, No. 23-60471 (5th Cir. June 5, 2024)","publisher":"U.S. Court of Appeals for the Fifth Circuit (via govinfo, USCOURTS collection)","document_type":"court","url":"https://www.govinfo.gov/app/details/USCOURTS-ca5-23-60471","publication_date":"Decided 2024-06-05","jurisdiction":"US","status":"final","last_verified":"2026-10-01"}},{"source_id":"SRC-US-FR-2023-09775","pinpoint":"88 FR 38161-38162 (section 6 item B: adviser-led secondary transactions reported within 60 days of fiscal quarter end; definition); 88 FR 38146 (DATES)","supports":"Adviser-led secondary transaction definition (initiated by the adviser or a related person; investors offered the choice to sell or to convert or exchange into another vehicle advised by the adviser or a related person) and quarterly reporting by private equity fund advisers that file Form PF","source":{"source_id":"SRC-US-FR-2023-09775","title":"Form PF; Event Reporting for Large Hedge Fund Advisers and Private Equity Fund Advisers; Requirements for Large Private Equity Fund Adviser Reporting (final rule), Release IA-6297, 88 FR 38146","publisher":"U.S. Securities and Exchange Commission (Federal Register via govinfo)","document_type":"release","url":"https://www.govinfo.gov/content/pkg/FR-2023-06-12/pdf/2023-09775.pdf","publication_date":"Adopted 2023-05-03; published 2023-06-12; sections 5 and 6 effective 2023-12-11; remainder effective 2024-06-11","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"}},{"source_id":"SRC-US-FR-2026-07993","pinpoint":"91 FR 22232 (summary, Release IA-6959, proposed 2026-04-20); 91 FR 22257 (section II.O: proposal to eliminate Form PF section 6 in its entirety); pending as of 2026-10-02","supports":"Pending SEC/CFTC proposal of April 2026 to eliminate Form PF section 6 private equity event reporting; not adopted as of 2026-10-02","source":{"source_id":"SRC-US-FR-2026-07993","title":"Form PF; Reporting Requirements for All Filers (joint proposed rules), 91 FR 22232","publisher":"U.S. Securities and Exchange Commission and Commodity Futures Trading Commission (Federal Register via govinfo)","document_type":"release","url":"https://www.govinfo.gov/content/pkg/FR-2026-04-24/pdf/2026-07993.pdf","publication_date":"Proposed 2026-04-20; published 2026-04-24; comments due 2026-06-23","jurisdiction":"US","status":"proposed","last_verified":"2026-10-01"}}],"faq":[{"q":"Why would a GP use a continuation vehicle instead of selling the asset?","a":"To keep managing a company it believes has more value to create, often with fresh capital, while giving existing LPs the option of liquidity. The trade-off is a conflict of interest, because the GP sets the terms on both sides."},{"q":"What is a status-quo option?","a":"An election that lets an existing LP roll into the continuation vehicle on its original economic terms instead of the new fee and carry terms. It is not always offered; ILPA's 2023 guidance lists its absence as an LP concern."},{"q":"Does a sale to a continuation vehicle count as a realisation?","a":"For the selling fund, yes: it is recorded at the transaction price and increases DPI. Analysts usually separate these realisations from third-party exits when judging a manager's record."}],"seo":{},"first_published":"2026-01-06","last_reviewed":"2026-10-02","last_modified":"2026-10-02","content_version":"2.0.0","url":"https://altss.com/glossary/continuation-vehicle","json_url":"https://altss.com/reference/concepts/continuation-vehicle.json","title":"Continuation Vehicle (CV)","formulas":[],"sources":[{"source_id":"SRC-ILPA-CONTINUATION-FUNDS-2023","title":"Continuation Funds: Considerations for Limited Partners and General Partners","authors":"Institutional Limited Partners Association","publisher":"ILPA","document_type":"guidance","url":"https://ilpa.org/resources-tools/resource-library/continuation-funds-considerations-for-limited-partners-and-general-partners/","year":2023,"publication_date":"May 2023","jurisdiction":"intl","status":"Current but under revision: draft Continuation Vehicle guidance released 24 June 2026, comments closed 5 August 2026; final not yet confirmed","last_verified":"2026-10-01"},{"source_id":"SRC-US-COURT-CA5-23-60471","title":"National Association of Private Fund Managers v. SEC, No. 23-60471 (5th Cir. June 5, 2024)","publisher":"U.S. Court of Appeals for the Fifth Circuit (via govinfo, USCOURTS collection)","document_type":"court","url":"https://www.govinfo.gov/app/details/USCOURTS-ca5-23-60471","publication_date":"Decided 2024-06-05","jurisdiction":"US","status":"final","last_verified":"2026-10-01"},{"source_id":"SRC-US-FR-2023-09775","title":"Form PF; Event Reporting for Large Hedge Fund Advisers and Private Equity Fund Advisers; Requirements for Large Private Equity Fund Adviser Reporting (final rule), Release IA-6297, 88 FR 38146","publisher":"U.S. Securities and Exchange Commission (Federal Register via govinfo)","document_type":"release","url":"https://www.govinfo.gov/content/pkg/FR-2023-06-12/pdf/2023-09775.pdf","publication_date":"Adopted 2023-05-03; published 2023-06-12; sections 5 and 6 effective 2023-12-11; remainder effective 2024-06-11","jurisdiction":"US","status":"in force","last_verified":"2026-10-01"},{"source_id":"SRC-US-FR-2026-07993","title":"Form PF; Reporting Requirements for All Filers (joint proposed rules), 91 FR 22232","publisher":"U.S. Securities and Exchange Commission and Commodity Futures Trading Commission (Federal Register via govinfo)","document_type":"release","url":"https://www.govinfo.gov/content/pkg/FR-2026-04-24/pdf/2026-07993.pdf","publication_date":"Proposed 2026-04-20; published 2026-04-24; comments due 2026-06-23","jurisdiction":"US","status":"proposed","last_verified":"2026-10-01"},{"source_id":"SRC-US-SEC-PFAR-VACATUR-NOTICE","title":"Announcement Regarding the Private Fund Advisers Rules","publisher":"U.S. Securities and Exchange Commission","document_type":"guidance","url":"https://www.sec.gov/announcement-regarding-private-fund-advisers-rules","publication_date":"2024-10-31","jurisdiction":"US","status":"current","last_verified":"2026-10-01"},{"source_id":"SRC-US-SEC-REL-IA-6383","title":"Private Fund Advisers; Documentation of Registered Investment Adviser Compliance Reviews (final rule), Release No. IA-6383","publisher":"U.S. Securities and Exchange Commission","document_type":"release","url":"https://www.sec.gov/files/rules/final/2023/ia-6383.pdf","publication_date":"Adopted 2023-08-23","jurisdiction":"US","status":"vacated","last_verified":"2026-10-01"}]}