Guide to continuation funds: A market that has come of age
GP-led secondaries are a growing part of the private equity landscape, providing a valuable liquidity tool for both fund managers and investors, and offering innovative capital solutions that solve for key limitations of the private fund model.
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A headline theme across private markets over the past several years, driven by inflationary and interest rate pressures, has been the slowdown in deal and exit activity.
At the same time, there has been significant attention on the rise in secondaries as an investment theme. The secondaries market recorded $160 billion in transaction volume globally in 2024, a new annual record, and is positioned strongly as we move through 2025.
This reflects the continuation of a longer-term trend: as the private equity market matures and expands, the secondary market has similarly continued to grow and evolve. Meanwhile the demand for liquidity from private equity investors has only increased of late, driven by the notable decrease in exits and distributions.
Coinciding with the growth of secondaries has been that of continuation fund transactions, otherwise referred to as ‘GP-led secondaries’. These deals enable private equity managers to offer liquidity to existing investors, while at the same time extending the hold period of high-quality assets in their portfolio, backed by new capital.
Continuation funds have become a key growth driver within the secondary market, accounting for 45-50% of deal volumes over the past several years – and similarly recording a record total for transaction volume in 2024, of more than $70 billion (see chart).
The secondary market over time
Past performance is not a guide to future performance and may not be repeated. Source: Jefferies, Greenhill, Evercore, Lazard, Schroders Capital, 2024. The views shared may not lead to favourable investment outcomes. Forecasts and estimates may not be realised.
Continuation funds poised to continue strong growth trend
Continuation funds are a compelling exit route for portfolio companies, especially small and mid-market firms with significant transformational growth potential. In the short term, this appeal is amplified by current uncertainties, in particular in the context of the seismic change to US trade policy and subsequent market volatility, which are slowing the recovery of traditional exit routes including public market listings and sales to corporate buyers.
In the long term, considering the ongoing growth of private equity and the trend of companies staying private for longer, we project that the continuation fund market segment could continue the growth of recent years (see chart) in the years ahead. This is a topic to which we will return in an upcoming white paper.
The GP-led market has experienced significant growth
Past performance is not a guide to future performance and may not be repeated. Source: Jefferies, Greenhill, Evercore, Lazard, Schroders Capital, 2025. Includes all strategies globally (buyout, VC/growth, infrastructure/real assets, private debt, real estate).
Understanding the market: What is in this guide
Schroders Capital has an extensive and deep track record in GP-led secondaries, having invested more than $3 billion across more than 115 transitions globally.
In this guide, our team of expert investors will provide a more detailed overview of continuation funds, including how they are different and differentiated from wider private equity exposure and traditional LP-led portfolio secondaries, and why the lower mid-market is a particularly compelling space to target attractive risk-adjusted continuation fund returns.
We will also tackle some of the key investor questions on this space, relating among other things to alignment and conflicts of interest, risk management and valuations.
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