Podcast Summary: M&A Talk

Episode: "A Private Equity Fund Bought Your Business – What Happens When They Don't Want to Sell It?"
Date: October 1, 2025
Host: Jacob Oros, President & Founder, Morgan & Westfield
Guest: Jeff Bollerman, Managing Director, Private Capital Advisory Group, Raymond James

Episode Overview

In this episode, host Jacob Oros and guest Jeff Bollerman explore what happens when a private equity (PE) firm buys a business but cannot—or chooses not to—sell it before the fund's predetermined end date. The discussion centers on "continuation vehicles"—a relatively new mechanism in private equity enabling funds to hold onto high-performing or lagging companies beyond the original fund’s lifespan, offering new routes for both liquidity and ongoing investment. Sellers and business owners gain valuable insights on how these evolving strategies may affect their exit timelines, returns, and roles after selling to PE.

Key Discussion Points & Insights

1. What Is a Continuation Vehicle? (00:00–04:53)

• Background: PE funds typically have a 10–12 year life and expect to sell portfolio companies within that period for a return.
• When Things Go Well: Sometimes, an acquired company outperforms and the PE fund wants to keep it longer to capitalize on further growth.
• When Things Lag: Alternatively, some companies underperform or don’t hit expected growth in time, making a traditional exit challenging before the fund ends.
• Solution: In both cases, a continuation vehicle can be used. It’s a new fund (often with new investors) created specifically to “buy out” the company from the original fund and continue its ownership.
  • Quote (Jeff, 00:00): “Continuation vehicles are essentially a new technology in the private equity space... [acting as] a private equity fund with a single portfolio company and a handful of new investors.”

2. Types of Continuation Vehicles (05:34–08:13)

• Single-Asset: Formed around one successful, rapidly growing company.
• Multi-Asset ("Cleanup Trade"): Bundles together several remaining, often lagging assets at the end of a fund’s life.
• Purpose: Extends the “shot clock,” allowing the PE firm more years (typically 4–5) to manage the company or companies.
• Quote (Jeff, 07:02): “It’s essentially a private equity fund with a single portfolio company and a handful of new investors... That’s use case number one.”

3. How Does a PE Firm Sell to Itself? (04:59–09:30)

• Process: PE firm hires an investment banker to run a robust, independent process for price discovery—vital to mitigate conflicts of interest as the firm acts as both seller and buyer.
• LPs (limited partners in the fund) can choose to:
  • Sell their shares for immediate liquidity.
  • “Roll” their investment to keep exposure in the new fund.
• Who Pays For This? (09:09–12:14)
  • Legal and advisory fees are generally borne by the LPs who opt for liquidity, not by founders who continue with the new vehicle.
  • Founders and management expected to “roll” their equity into the new vehicle if they plan to stay on.
• Quote (Jacob, 09:22): “It’s a conflict of interest for their investors.”
  Jeff (09:24): “Absolutely… That’s exactly right.”

4. Secondary Markets & Prevalence of Continuation Vehicles (12:14–15:39)

• Scale: The private equity secondary market is now a ~$200 billion industry, half comprised of GP-led transactions (like continuation vehicles).
• Liquidity: These mechanisms have increased liquidity in private equity—once considered highly illiquid investments.
• Trends: Initially met with skepticism, continuation vehicles are now actively encouraged (sometimes demanded) by institutional investors.
• Quote (Jeff, 15:58): “LPs have gone from sort of being likely skeptical of the phenomenon to almost demanding it…”

5. Implications for Sellers and Business Owners (16:41–20:46)

• Longer Holding Periods: Owners might remain tied to the PE organization for longer than anticipated, especially if the company is a “home run.”
• Greater Liquidity Options: Increased exit flexibility for investors and founders.
• Evolving Market Dynamics: More efficient and liquid private equity market, but sellers should be aware that exit timing is less predictable.
• Quote (Jeff, 16:58): “More liquidity drives efficiency and should drive down whatever barriers would have kept folks from investing in private equity…”

6. Why Companies Might Underperform (17:29–18:41)

• Good vs. Bad Cases: While most continuation vehicles are created for strong, outperforming companies, they can also result from underperformance due to market factors, management, or insufficient growth capital.
• Quote (Jeff, 17:45): “The universe of, in this case, you know, failure has a thousand fathers, right?”

Notable Quotes & Memorable Moments

• On the Purpose of Continuation Vehicles

  “Essentially for your audience... it’s very possible that they are in bed with that private equity fund for much longer than they might have previously expected, either because their company is succeeding beyond any of the initial projections... or that it's resided... for five, six, seven, eight years...” — Jeff (19:59)

• On Market Evolution

  “Continuation vehicles are here to stay. ...Portfolio companies are being held by private investors for much longer and I think we’ll continue to see that.” — Jeff (18:49)

• On Managing Conflicts in Self-Sales

  “I think it’s become a best practice [to hire an investment banker] … If you think about the general partner, they are both buyer and seller.” — Jeff (09:13)

Timestamps for Core Segments

• [00:00–04:53]: What are continuation vehicles and why are they used?
• [05:01–09:30]: Mechanics of “selling to yourself” and conflict mitigation
• [09:30–12:14]: Costs, implications for founders and limited partners
• [12:14–15:39]: The size, efficiency, and acceptance of the secondary market
• [16:41–20:46]: Implications for sellers, liquidity, and key takeaways

Takeaways

• Continuation vehicles are a standardizing tool to allow PE firms to hold onto thriving or unsold assets beyond the term of the original fund.
• As private equity markets mature, sellers must prepare for the possibility of extended partnerships and evolving exit options.
• These vehicles are increasingly accepted—and sometimes expected—by institutional investors and can fundamentally reshape both liquidity and the holding period for private equity assets.