In the Press
April 24, 2024

Continuation Funds Favor 'Sliding' Carry, But Terms Vary Widely (FundFire)

Professionals

Private fund managers launching continuation vehicles are offering tiered hurdle and performance fee targets, but few standards have emerged. The increasingly popular continuation fund model – where private equity managers hang onto trophy portfolio companies by selling them into a follow-on vehicle built around that asset – is attracting more sponsors and investors, but has yet to establish market standards around deal terms and pricing – leaving a wide range of possible outcomes, industry watchers say. One reason for the wide dispersion in continuation fund terms is the varying quality of the managers and individual deals, said Robert Emerson, a partner in the Private equity and Private Investment Fund practice. "When there is a great manager in the market, there's a lot of demand for that asset," he said. "It allows the manager to ask for better terms."  More in FundFire.