Continuation investments continue to grow – and to reshape the buyout market
On the back of a record – and ahead of forecast – 2025, our analysis continues to point to significant growth in the market for continuation investments over the coming decade, driven both by buy-side demand and supply-side drivers.
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Key takeaways
- Market growth trend – and outlook. Since our first paper on this topic last year, the continuation investment market has continued to accelerate, with total transaction volume increasing ahead of forecast from a revised $76 billion for 2024 to a new record $109 billion in 2025. Our analysis points to this momentum continuing, with our base case showing investment volume more than tripling to more than $330 billion by 2035.
- Structural vs. cyclical drivers. The strong growth of continuation investments reflects a profound structural shift, with additional tailwinds from the ongoing cyclical downturn in exit markets. This cyclical component decreased to 9% in 2025, underscoring that continuation investments continue to be driven primarily by structural growth factors.
- Appeal to investors. Investor demand for continuation investments is being driven by the prospect of reduced risks and more predictable returns, faster liquidity (about 25% shorter holding periods) and lower fees (about half) compared to traditional buyouts.
- Disruption lies in who retains ownership. The most significant disruption is not in the concept of holding companies for longer under private equity ownership, but rather in who retains ownership. Sponsor-to-sponsor transactions (secondary buyouts) have traditionally been a key source of deal flow for many mid and large buyout managers, accounting for around a third of deals sourced over the past 10 years. Continuation investments instead enable the original sponsor to maintain control, without increasing aggregate holding periods. We now estimate that continuation investments will displace more than 10% of total deal flow for mid and large buyouts over the next 10 years.
- Candidates for continuation investments. Based on our analysis of ~2,600 realised buyout investments, we estimate that more than 30% of buyout portfolio companies are potential candidates for continuation investments. This reflects the share of portfolio companies that do not require new control (e.g. a change of fund manager) to continue a successful transformation strategy.
- Misconceptions around “GP-led secondaries”. The term “GP-led secondaries”, often used as a synonym for continuation investments, is a misnomer that leads to significant misunderstandings, as fund managers typically retain their interest in a portfolio company and do not realise performance fees. These transactions also generally include new capital and are shaped by the lead underwriters, together with the fund manager.
- The attractiveness of the lower mid-market. The lower mid-market has the lowest risk of being disrupted by continuation investments, due to its differentiated deal sourcing (less than 25% of investments sourced from other funds). We believe this segment also offers the most attractive continuation investment opportunities in terms of transformational potential and downside resilience, as supported by our prior research.
Glossary of key terms
Continuation investment - A transaction allowing a private equity manager, or GP (see below), to retain ownership of an asset, or assets, through a new investment vehicle, backed by new capital. These deals also allow existing investors, or LPs (see below), the choice to either sell their interest and realise any gains to that point, or “roll over” their holding into the new fund with the potential to realise additional upside when the continuation vehicle exits the investment.
GP-led secondaries – Another name for continuation investments. Schroders Capital believes this term can lead to significant misunderstandings and invite misleading comparisons to traditional LP-led (see below) portfolio secondaries. In practice, continuation investments have more in common with, and are a partial substitute for, sponsor-to-sponsor secondary buyouts (see below), but without a disruptive change of ownership.
Continuation vehicle - The new investment vehicle, or fund, that is used in a continuation investment. The new fund will acquire one or more existing portfolio companies from an existing private equity fund managed by the same GP.
Single-asset continuation vehicle (SACV) - A continuation vehicle that purchases and then manages a single portfolio company through a continuation investment, allowing the existing manager to continue value creation backed by new investor capital. These are concentrated, high-conviction investments, with underwriting similar to direct buyouts but with typical secondaries risk mitigation through backing a proven asset and growth story.
Multi-asset continuation vehicle (MACV) - A continuation vehicle that purchases and manages multiple portfolio companies through a continuation investment, providing similar benefits of continued ownership but with a more diversified portfolio underwriting approach. We will cover the differences between SACVs and MACVs in greater detail in a forthcoming paper.
LP-led secondaries – Traditional portfolio sale secondaries through which an investor, or LP, sells its interest in one or multiple private equity funds to another investor, without requiring changes to the underlying portfolio or fund set up. The new investor takes the exiting investor’s place in the fund, which continues to run as before. These transactions often involve a large number of underlying portfolio company exposures.
General Partner (GP) - The private equity manager of a fund, which is responsible for sourcing, managing and exiting investments on behalf of investors. In a continuation investment, the GP is also be the manager of the continuation vehicle and would continue their value creation plans for the underlying asset, or assets, backed by new investor capital.
Limited Partner (LP) - An investor providing capital to a private equity fund without taking responsibility for day-to-day investment decisions. In a continuation investment, existing LPs can opt to sell their interest, or roll it into the continuation vehicle, alongside the new investors, to potentially realise greater upside later.
Lead underwriter - The secondary investor that leads a continuation investment, alongside the existing GP. They will lead due diligence, pricing and structuring of a continuation investment with the continuing fund manager.
Sponsor-to-sponsor transactions (secondary buyouts) - The sale of a portfolio company from one private equity fund and manager to another. These deals are similar in many ways to continuation investments, but with a change in ownership. They have accounted for more than a third of new private equity deal activity over the past two decades – and as much as 50% of mid and large-cap deal volume.
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