Muted exits push private equity continuation funds to 8-year high

Capital raised by private equity continuation funds surged in 2025 as private equity managers sought to extend their ownership stakes in portfolio companies and provide liquidity for investors.

In 2025, global private equity continuation funds raised a total of $62.67 billion, the highest annual amount since at least 2017, according to Preqin Pro data. Through May 8, 2026, continuation funds have raised $11.86 billion across 20 vehicles.

The number of closed continuation funds also climbed to an eight-year high of 105 in 2025.

The growth of continuation fund transactions reflects several parallel issues converging on the market over the past three years, including extended asset hold periods exacerbated by ongoing muted M&A and IPO markets, record levels of unrealized value in private funds and the mounting liquidity needs of limited partners, said Tara Walsh, senior consultant for industry affairs at the Institutional Limited Partners Association, an organization representing institutional limited partners that invest in private equity.

"The market has come to accept [continuation funds] not simply as a cyclical response to liquidity pressures in recent years but as a recurring structural feature used by sponsors to deliver exits and to fundraise," Walsh said.

The exit environment has created a backlog of companies held for more than four years that are potential candidates for continuation fund transactions, said Gerald Cooper, partner and global co-head of secondaries at Campbell Lutyens & Co. Inc.

The challenging exit environment has also bifurcated continuation vehicle strategies into those used to hold genuinely high-quality assets that private equity firms believe can achieve further value creation and those that serve to delay recognizing losses on assets with structurally impaired competitive positions, said Adam Reilly, national managing partner for mergers, acquisitions and restructuring services at Deloitte & Touche LLP.

"We expect continuation fund activity to remain elevated, but the quality and credibility of the underlying thesis will matter more than ever," Reilly said.

– Read about private equity exits in Europe and the UK. – Catch up on the Big Four's private equity sentiment in the first quarter. – Explore more private equity coverage.

Fairness concerns

The Institutional Limited Partners Association warned of risks related to continuation fund transactions, as these are "inherently conflicted," with general partners acting as both buyers and sellers.

"Sponsors must balance competing obligations to existing fund [limited partners] and new continuation vehicle investors. This requires a clear, well-articulated commercial rationale for pursuing a continuation vehicle in the first place," Walsh said.

Deloitte's Reilly said that general partners have introduced third-party minority investors whose pricing and underwriting standards can provide an additional market-based reference point when assessing fairness.

Per region

North America-based continuation funds secured the largest amount of capital since the start of 2025 through May 8, 2026, with $45.87 billion raised, according to Preqin Pro data. During this period, 70 funds closed.

Europe came in second, with $27.04 billion of capital raised across 41 funds, while eight Asia-based funds brought in $1.12 billion.