Top takeaways
- GP-led deal value is heading for a record year
- CVs are becoming strategic tools for retaining high-quality assets
- Longer hold periods and fixed fund lives create structural room for growth
- Valuation, timing and rollover terms remain the biggest sources of conflict
- Early LP engagement, competitive pricing and meaningful GP commitments are critical
GP-led secondaries activity is at record levels. In these transactions, PE fund managers move assets from a maturing fund into a new continuation vehicle (CV), a fund that holds one or more assets, often with a holding period that extends beyond the original fund’s term.
Globally, GP-led deal value climbed 35 percent year-over-year to US$65 billion in the first half of 2026, according to Evercore, putting the market on pace to reach an all-time annual high. North America is leading this surge, generating approximately 70 percent of worldwide GP-led volume through the first half of 2026.
The GP-led secondaries market has grown rapidly in the past decade, from just US$11 billion in 2016. CVs have evolved from tools used primarily to extract portfolio companies from ageing funds into structures that allow GPs to retain control of their best assets while giving investors the option to take liquidity.
CV deals have proven particularly useful amid weak activity in traditional IPO and M&A exit channels. High interest rates and macroeconomic volatility have slowed company sales, creating a backlog of unsold portfolio businesses. This environment, in turn, has constrained distributions to investors and put GPs under pressure to find alternative methods to unlock liquidity for LPs. CV deals have served as useful liquidity release valves, with research from KPMG finding that CVs accounted for almost one in five sponsor-backed exits in 2025.
A structural change
However, growth in CV activity is not solely a response to the slowdown in traditional exit markets. It also reflects a structural shift in private markets, as investors and managers seek to reconcile fund lives with optimal hold periods for portfolio companies.
Average hold periods for assets have reached seven years, according to Bain & Co, and although near-term exit bottlenecks have been a contributing factor, GPs are also extending hold periods to maximize value creation and compound returns from their best assets. Rather than sell a business to a rival and source a comparable asset, many GPs prefer to reinvest in a portfolio company’s next phase of growth.
The CV structure facilitates this strategy, allowing the GP to hold a prized asset and to provide a liquidity event for LPs that have to recycle capital into new fund vintages and manage investment duration.
CVs are now an established approach for selling or recapitalizing portfolio companies. As LPs and GPs become more sophisticated, CV activity is likely to grow alongside traditional exit routes.
Managing conflicts: The key to CV success
The CV market’s expansion has also made the LP-GP relationship more complex.
CV deals are inherently conflicted transactions, as the GP sits on both sides of the transaction, and LPs have become increasingly sensitive to CV deals that could leave them in a weaker position than if an asset had been sold in a “clean” exit to a third-party buyer.
LP concerns take many shapes and forms. They want to know how CV targets are valued, and whether values are tested in competitive M&A-style processes. LPs are typically equipped to assess fund managers and track records rather than individual assets, so they need sufficient time to evaluate a CV proposal and decide whether to take liquidity or roll their interest in the underlying asset(s) into the new structure. If LPs do opt to roll, they want to know whether their existing management fee and hurdle-rate arrangements will remain unchanged.
Some LPs have also raised concerns about the quality of CV candidates and challenged GPs about whether they are packaging weaker, otherwise unsaleable assets into CVs to secure an exit, or engaging in a transaction that may not maximize investment returns to the selling partnership.
CVs have largely been used to extend exposure to trophy assets. An HEC study supports this, showing that for vintages spanning 2018 to 2024, single-asset and multi-asset CVs provided superior distributed to paid-in and total value to paid-in ratios than buyouts. However, some companies placed in CVs have filed for bankruptcy, and disputes between investors and managers have resulted in litigation.
The market is evolving to address these concerns. LP advisory committees are engaging earlier and more actively when GPs propose CV transactions, and are playing an influential role in shaping transactions that might otherwise disadvantage existing LPs.
LPs are also using fund side letters to set requirements for how CV processes are conducted, and the Institutional Limited Partners Association recently drafted new CV guidance addressing process integrity, pricing mechanisms, conflict of interest management and transparency.
What a good CV looks like
Recognizing that a poorly run CV process may deter LPs from investing in future primary funds, GPs are responding to their concerns.
GPs are involving LP advisory committees and other LPs earlier in the process, often up to four months in advance, to give LPs time to consider whether to take liquidity or roll over their interests.
Managers are also taking additional steps to align their interests with LPs and address concerns that conflicts could disadvantage existing investors. GPs are doing so by making outsized GP commitments to CV funds and rolling most, or all, of any realized carried interest into the CV. Hamilton Lane research found that, in the last three years, the average GP commitment to a CV has been around 9 percent, and that GPs have rolled 100 percent or more of realized carried interest proceeds in 88 percent of CV deals.
Maintaining LP-GP alignment will be critical to sustaining the CV market’s momentum and growth.
The potential CV market is substantial because maturing funds hold significant unrealized portfolio company value. Demand currently exceeds market capacity, supporting a full deal pipeline.
For the market to reach its full potential, CV transactions must deliver fair outcomes for both GPs and LPs. Competitive sales processes, transparent valuations, reasonable timelines and aligned interests will be crucial to achieving this.
