-Mindaugas Suklevicius – Founder and Fund Manager at HF Quarters
Continuation vehicles (CVs) and GP-led secondaries are no longer rare contingency plans or emergency exits. Today, they represent a permanent fixture of private equity exit activity. Yet, despite their mainstream adoption, managers still treat CVs like an unexpected detour. With extended asset holding periods now a structural reality, treating a continuation fund as a late-stage afterthought is no longer sound fund architecture. Modern partnership terms must be ready from Day 1.
Scrambling to design a continuation vehicle under pressure at the last minute creates unnecessary friction. When GPs attempt to retrofit terms late in a fund’s lifecycle, LPs naturally view the move with suspicion.
This late-stage scramble triggers predictable flashpoints across the investor base. Valuation issues can arise around whether asset pricing reflects true market value, while LPs experience decision fatigue when crammed into tight execution windows.
The solution requires moving from reactive firefighting to proactive architecture during fund formation. Managers should embed clear, pre-agreed frameworks directly into their original partnership agreements.
A continuation vehicle-ready agreement relies on foundational pillars established upfront, such as pre-agreed valuation mechanics and streamlined governance protocols before any tensions arise. While LPs might welcome the option to use a continuation fund, surprises are not always welcome. Pre-negotiating terms upfront signals institutional maturity and transparency.
The private equity market has evolved, and fund documentation must catch up. Treating continuation vehicles as an emergency solution can be detrimental to the relationship with investors. Fund managers can distinguish themselves not just by how they source or exit deals, but by how smoothly they manage full asset lifecycles. Execution speed and LP trust can be distinct competitive advantages.