Podcast Summary: How I Invest with David Weisburd

Episode 311: “How Continuation Vehicles Quietly Reshaped Private Equity”

Date: February 24, 2026
Guest: Ben (Jefferies, Secondaries Team Leader)

Episode Overview

This episode dives into the surging trend of “continuation vehicles” (CVs) in private equity. Host David Weisburd speaks with Ben, leader of the secondaries team at Jefferies—a group heavily engaged with CVs—to explore why CVs have become central to the private markets, how these deals function, the pros and cons for LPs and GPs, best practices, and the impact on the PE landscape.

Key Discussion Points & Insights

1. The Rise of Continuation Vehicles

• Volume and Growth
  • CVs are the fastest growing, and among the most innovative, segments in private equity.
  • 2025 saw over $110B in CV volume, up from $75B in 2024, marking a second consecutive record year.

    "There will be announced in the next week or so. North of $110 billion of continuation vehicle volume in 2025." – Ben [00:14]

• Deal Distribution
  • Not limited to major firms: CV activity is distributed across large-cap, mid-market, and even venture firms.
  • Individual vehicles commonly range from $100M to $5B, with an average size of $500M.
  • Targets include both established buyout companies and pre-IPO “VC darlings” like Stripe, Databricks, and Anthropic.

2. Why CVs Became Popular

• Structural Efficiency
  • The traditional 5-year hold period is arbitrary and inefficient, resulting in value loss during "dead years" (the first and last year of an asset’s hold cycle).
  • CVs allow GPs to retain and compound top-performing assets rather than being obliged to sell them prematurely.

    "You have this five year hold period, which...is arbitrary. Maybe it should be three years, maybe it should be 10 years..." – David [04:18] "Continuation vehicles just allow sponsors to have more time and capital to prosecute those already working strategies." – Ben [05:40]

• Market Friction Reduction
  • Selling assets typically introduces friction: board changes, new owners, potential management turnover.
  • Staying invested through a CV lets existing, well-aligned teams keep scaling successful businesses.

3. The LP Perspective: Love–Hate Relationship

• Reasons LPs Like CVs:
  • They are a steady source of liquidity (about 20% of private equity distributions in 2025 came via CVs).
  • Enable LPs to "compound winners"—continue investing in strong performers instead of being rotated out through traditional sales.
  • Provide access to top deals, with high-quality alignment between GPs, management, and investors.

    "Continuation vehicles are a pretty steady source of liquidity. And not just liquidity, but cash liquidity for LPs." – Ben [06:45]

• Reasons for Skepticism:
  • LPs are now forced to underwrite deals directly, requiring a new skill set not all have developed.
  • Pricing can be opaque; some LPs suspect asset “marks” (valuations) may be unreliable or manipulated.

    “A lot of LPs are not set up to do direct deals now. They essentially are re-underwriting it on a direct basis. It's a different skill set almost.” – David [08:43]

4. Pricing & Process: How CVs Get Priced

• Auction Style Sales
  • Most CVs are priced through advisor-led auction processes targeting specialized CV investors, not traditional buyers.
• Alternative Mechanisms
  • Sometimes priced as part of a recapitalization with new sponsors.
• Valuation Conflicts
  • High-profile lawsuits (e.g., Abu Dhabi Investment Corporation vs. one of their managers) stem from disputes on valuations.

5. Best Practices & Alignment

• Flexible Rollover Option
  • LPs should have a true option to either cash out or roll part/all of their investment into the new vehicle.

    "Continuation vehicles are really predicated on a rollover option for LPs, a flexible rollover option..." – Ben [14:02]

• Alignment of Interests
  • Most attractive deals are those where the GP “eats their own cooking”—rolling significant equity into the CV.
  • High alignment across sponsor and LP base is crucial for a smoothly executed deal.

6. What Makes the Ideal CV Deal?

• Company Profile
  • Mid-market companies with recurring revenues, predictable cash flows, and room for organic/inorganic growth are highly sought after.
• Three Key Questions for LPs Before Approving a CV:
  1. How did we get here? – What's the investment background and growth story?
  2. What alternatives were considered before a CV?
  3. Is future growth comparable to past performance, or is the asset “out of gas”?

  "The continuation vehicle market isn't a dustbin for companies that cannot be sold..." – Ben [17:04]

7. Who’s Investing in CVs?

• Key Players
  • Top global allocators: US and Canadian pensions, Middle Eastern and East Asian sovereign wealth funds.
  • Large private equity secondaries funds: Coller Capital, AlpInvest, HarbourVest, Neuberger Berman.
  • Increasingly, sector-focused new entrants, especially in tech/software.

    "...those groups are responsible for a lot of the demand for continuation." – Ben [18:33]

8. Market Impact & Strategic Benefits

• Solving for Scale and Selectivity
  • CVs let large LPs deploy significant capital into familiar, high-quality assets—mitigating adverse selection risk.
• J-Curve Mitigation
  • CVs help LPs avoid lengthy periods of capital deployment without returns, aligning with desire for non-blind pool, near-term investment opportunities.

    "It also fits into this interesting trend of direct opportunities, non blind pool opportunities, shorter hold times..." – David [20:37]

9. Venture & Growth Equity: A New CV Frontier

• Distinct Rationale
  • For VC managers, CVs provide portfolio liquidity for funds stuck holding large, mature private stakes (e.g., OpenAI, Stripe, Anthropic) when IPO windows are closed.

    "...venture capital managers are really thinking about this as...a simple lever to pull to create cash distributions for a portfolio in an older vintage fund frankly." – Ben [22:01]

10. Relationship Builder: CVs as “Expensive Dates”

• GP-LP Dynamics
  • CVs offer a diligent, asset-specific way for GPs and LPs to evaluate working together, sometimes leading to broader fund commitments.

    "In the same way that LPs consider co-investment opportunities...because continuation vehicles...gives you a window into how the sponsor has thought about growing a business." – Ben [23:58]

Notable Quotes & Moments

• On Arbitrary Hold Periods:

  “What was going on before continuation vehicles in many ways is absurd.” – David [04:18]

• On LP Cognitive Dissonance:

  “They have this cognitive dissonance...continuation vehicles have created a portfolio management consideration and motion, frankly, that didn't exist for many LPs 10 years ago.” – Ben [06:45]

• On the Evolution of CVs:

  "I've had the privilege to work on several of the first billion dollar plus continuation vehicles when the market was making that transition from a solution to a problem to a portfolio management tool." – Ben [24:55]

• On the Best Way to Diligence a Manager:

  “It’s that old joke. The best way to diligence a manager is to be an investor.” – David [24:41]

Timestamps for Key Segments

• 00:14 — Market Size & Growth: $110B in CV volume
• 02:18 — Reasons for CV Popularity: Friction in old PE exit models
• 06:45 — The LP Cognitive Dissonance: Love-hate on CVs
• 09:33 — Pricing and Valuation of CVs
• 14:02 — Best Practices & Rollover Options
• 17:04 — Three LP Due Diligence Questions for CVs
• 18:33 — Who Buys CVs Today: Key institutional players
• 20:37 — Strategic Benefits: J-curve and blind pool avoidance
• 22:01 — CVs in Venture Capital
• 23:58 — CVs as GP-LP Relationship Builders
• 24:55 — Biggest Deals Done

Tone & Takeaways

The conversation is candid, filled with industry-specific insight and a dose of skepticism about PE traditions. Both host and guest emphasize the ongoing transformation of private equity as CVs move from esoteric solutions to mainstream portfolio management tools. For institutional investors, understanding CVs is now essential.

In Summary

Continuation vehicles have rapidly reshaped private equity, bringing innovation, liquidity, and alignment—alongside new dilemmas for LPs, especially regarding valuation and direct deal underwriting. The future will see CVs remain “a trend here to stay,” as both a hedge against inefficient holds and a bridge between asset managers and long-term investors.