A growing reliance on multi-layer continuation vehicles is leaving private equity assets in prolonged ownership structures, highlighting the industry’s struggle to exit investments through traditional sales or IPOs, according to a report by the Financial Times.
One example is drugmaker Curium, originally acquired by London-based private equity firm CapVest Partners in 2016, which has now been rolled into a “CV squared” structure that transfers assets from one continuation fund into another.
Continuation vehicles, or CVs, were initially designed to extend the life of funds holding assets that could not be sold during weaker market conditions, such as the post-pandemic period. However, the emergence of “CV squared” structures is taking this further by recycling already-extended assets into additional vehicles, effectively resetting holding periods rather than realising exits.
The trend reflects a broader backlog of unsold private equity assets, estimated at roughly $3.8tn globally, as subdued IPO markets and limited strategic M&A activity constrain traditional exit routes. Industry estimates suggest CV-related transactions could exceed $100bn this year, continuing a sharp upward trajectory.
While supporters argue these structures provide time for portfolio companies to mature and potentially achieve stronger valuations, critics warn they may simply delay recognition of fair value and obscure underlying performance. Some institutional investors and consultants have raised concerns about transparency, valuation consistency and fee layering across successive vehicles.
In practice, investors in expiring CVs are typically offered a choice between cashing out – often at or below net asset value – or rolling their exposure into a new structure in exchange for continued ownership. Secondary market sales at discounts have also become more common for investors seeking liquidity.
Institutional reactions remain mixed: some long-term allocators are willing to roll positions in anticipation of future upside, while others are increasingly forced to sell due to liquidity needs or portfolio rebalancing pressures. Market participants note that the persistence of CV structures underscores a broader shift toward “evergreen” private markets exposure in an environment where exits remain structurally constrained.
