Private equity firms, in part because of how their funds are structured, tend to be temporary investors. They buy companies, execute a strategy aimed at maximizing their value and exit, hopefully at a valuation greater than they paid going in. Limited partners go along for the ride in the hope of reaping the benefits.

But for many funds, the interest rate landscape and other market conditions are drastically different now than when they were launched, leading to the rise in popularity of continuation funds or vehicles (CVs). In these deals, rather than sell the company to another investor or go public as a fund reaches its target exit date, the original sponsors opt to hold onto their investment, rolling it into a new fund with a timeline of another five to seven years. At that point, LPs in the original deal are typically given the choice to cash out or roll over into the new fund. READ MORE