Private equity firms in the United States ended 2025 with a pronounced shift in how they manage investment exits, increasingly favoring internal asset transfers over traditional methods such as public listings or third-party sales. This strategic turn has centered around the growing use of “continuation vehicles,” a mechanism that allows private equity managers to retain ownership of high-performing assets by selling them to new funds they also control. The result is a record-breaking level of internal transactions that signal not only an adaptation to difficult market conditions but also a transformation in how firms envision long-term growth and value realization.
According to recent data reported by the Financial Times, continuation vehicle deals accounted for approximately 20 percent of all private equity exits in the U.S. in 2025. That figure marks a significant increase from around 12 to 13 percent in 2024, underscoring the growing importance of these internal transfers within the broader private equity landscape. The surge comes at a time when traditional exit routes, particularly public offerings and corporate buyouts, have become increasingly constrained due to economic volatility, rising interest rates, and shifting investor sentiment.
At the core of a continuation vehicle strategy is the creation of a new investment fund by a private equity firm that acquires one or more portfolio companies from an older fund also managed by the same firm. This allows limited partners in the older fund the option to receive liquidity by selling their stakes or to reinvest in the new fund for continued exposure. For the general partner, the ability to maintain control of promising assets while simultaneously returning capital to investors represents a powerful solution in a challenging exit environment.
This evolving model offers distinct advantages for all parties involved. Private equity firms can extend the life of successful investments, providing more time for strategic growth, operational improvement, or market expansion. At the same time, limited partners are afforded greater flexibility in how they manage their commitments — either taking gains and reallocating or staying invested in businesses that still hold upside potential. For investors who remain in the asset through the new fund, there is the appeal of reduced risk associated with mature, better-understood portfolio companies.
However, the sharp rise in continuation vehicle activity has not come without scrutiny. Because these deals involve a firm effectively selling an asset to itself — from one fund it manages to another — concerns about governance, valuation, and transparency have emerged. Critics argue that such arrangements could create conflicts of interest, particularly if general partners are incentivized to set favorable pricing that might not reflect true market value. In response, many firms have adopted more robust procedures to mitigate these risks, including seeking third-party valuations, running competitive bidding processes, and ensuring detailed disclosures to all stakeholders.
Despite these concerns, the broader private equity industry appears to be embracing the continuation model as a permanent feature of its exit strategy playbook. Advisors estimate that the total value of continuation transactions in 2025 reached over $100 billion, compared with roughly $70 billion the year before. This level of activity reflects both necessity and strategic intent, as firms adapt to an environment where patience and capital recycling have become more important than quick exits.
The reliance on continuation vehicles also reflects deeper shifts in the economics of private equity. With tighter credit markets, regulatory pressures, and global macroeconomic uncertainty, the traditional levers that fueled rapid buy-and-flip strategies are no longer as dependable. As a result, firms are investing more time and resources into long-term value creation, operational excellence, and sector-specific growth, especially in industries like technology, healthcare, and infrastructure.
The trend also speaks to changing investor expectations. Limited partners, such as pension funds, sovereign wealth funds, and insurance companies, increasingly seek stable, long-duration exposure to assets with clear value-creation paths. Continuation funds, with their more concentrated focus and typically lower volatility, offer an appealing complement to more speculative or early-stage investments. This has led to a greater institutional appetite for secondary fund exposure, further fueling the viability of internal transfers as a mainstream practice.
Looking ahead, the use of continuation vehicles is expected to grow not just in volume but in sophistication. Some firms are bundling multiple assets into larger continuation platforms, while others are developing new structures to align incentives across multiple stakeholder groups. As regulatory bodies and industry organizations continue to monitor and refine best practices, the framework surrounding these deals will likely become more standardized and transparent.
Ultimately, the surge in continuation vehicle activity in 2025 reveals more than just a tactical response to temporary market challenges. It represents a broader evolution in how private equity firms balance liquidity, control, and long-term value. As the industry continues to mature, internal asset transfers are poised to become a defining feature of modern private equity management — one that bridges the gap between capital constraints and growth ambitions.
