Continuation Funds in Private Equity: Benefits, Risks, Structuring Considerations, Market Developments

Continuation funds continue to serve as a viable liquidity tool in private equity and their popularity has surged in recent years. A continuation fund is established by a fund sponsor for the purpose of acquiring one or more portfolio companies held by the existing fund. This allows the existing fund to extend the fund's ownership of a highly valued asset beyond the original fund's term to see it reach its full potential. 

Continuation funds can be a solution in a difficult exit market. Some of the key benefits of a continuation fund include enhanced liquidity for limited partners (LPs), greater flexibility for LPs to cash out or remain invested in the underlying portfolio, and continued asset management. 

Despite their usefulness as a liquidity strategy, continuation funds have inherent conflict of interest issues and other considerations that must be properly addressed by counsel when structuring these transactions. Also, regulatory scrutiny of these transactions remains high, making it challenging to navigate the evolving compliance landscape.

Listen as our authoritative panel reviews the mechanics of continuation funds and the current market trends and developments in secondary transactions. The panel will also provide guidance for structuring these highly bespoke transactions to ensure compliance with the evolving regulatory framework.

I. Overview: the rise and evolution of continuation funds in today's private equity market

II. How continuation funds operate

III. Benefits and risks associated with continuation funds

IV. Structuring considerations

V. Regulatory concerns and uncertainty

VI. Practitioner pointers and key takeaways

The panel will address these and other key considerations:

• How have continuation funds evolved and gained momentum in recent years?
• What are common continuation fund structures and strategies?
• How can conflicts of interest be managed in a continuation fund transaction?
• What are the key regulatory considerations relating to continuation funds, and what are best practices for managing these issues?