GP-Led Continuation Vehicles, Explained

A GP-led continuation vehicle is a new partnership or LLC the general partner forms to hold one or more assets after the selling fund's term. Existing limited partners elect cash or a roll into that new vehicle. The GP sits on both sides of the transfer, so LPAC conflict review is part of a well-run process.

This article is mechanics, not a buy or sell thesis, and not a guide to pooling new money to buy someone else's shares. For that buy-side path, see how to set up a secondary SPV and venture secondaries in 2026. Those posts cover a new vehicle buying existing stock. A GP-led continuation vehicle starts from a fund the GP already manages.

This is general information, not legal, tax, or investment advice. The selling fund's LPA, the CV documents, and the election pack control.

What a GP-led continuation vehicle is

A continuation vehicle (CV) is a successor vehicle. The selling fund transfers one asset or a strip of assets into a newly formed limited partnership or LLC, often with a new term, new capital, and a new LP roster. Incoming buyers — typically secondary firms and other institutions — fund the cash that selling LPs receive. Rolling LPs keep exposure by taking interests in the new vehicle instead of cash.

The GP usually remains the manager. That is what GP-led means, as distinct from an LP selling a fund interest on the traditional secondary market without the manager running a bid on a named asset.

ILPA's 2023 guidance, Continuation Funds: Considerations for Limited Partners and General Partners, states two principles: the transaction should maximize value for existing LPs, and rolling LPs should be no worse off than if the transaction had not occurred. ILPA is not a regulator; the document is guidance, not a fit for every deal. (ILPA, May 2023 PDF)

In June 2026 ILPA published draft updated continuation-vehicle guidance. The comment period closed on 5 August 2026; ILPA aims to publish a final version later in 2026. Until then the 2023 document is the published reference, and ILPA flags that it is under review. (ILPA, Continuation Vehicles)

Three steps: new vehicle, transfer, election

1. A new vehicle is formed. Commonly a Delaware limited partnership or an LLC taxed as a partnership. Formation plumbing matches how to set up an SPV. The economics are not those of a syndicate SPV buying a cap-table line. The CV is taking assets out of an existing fund.

2. The selling fund transfers the selected assets. Price is set through a bid process. ILPA's 2023 guidance says a competitive process should be run so a fair price was obtained, with third-party price validation.

3. Existing LPs elect. Each LP chooses cash, a roll, more than a pro-rata roll, or a mix. The election is the product. Without a real election, the GP has simply moved an asset into a vehicle it also manages.

A buy-side secondary SPV does none of those three things. It raises from new investors and buys shares from a holder who wants liquidity. The selling fund's LPAC is not in the room.

Cash versus roll

ILPA's 2023 process outline lists four election outcomes: roll the interest on a pro-rata basis into the new entity; sell to the acquirer on the terms offered; roll and purchase more interests; or some combination.

If an LP does not return an election in time, ILPA recommends treating that silence as a sale, not a roll. LPs should never be forced into the new vehicle. The 2023 timing floor is no less than 30 calendar days or 20 business days, counting bank holidays, with a preference for more time where LPs must re-underwrite the asset as a new investment.

Status quo versus rolling on new terms

"Roll" is not one product. ILPA defines a status quo option as a roll with:

• no increase in the management fee rate

• no change in the management fee base (for rolling LPs, the same base the selling fund used at the time of the transaction)

• no increase to the carried interest rate, no decrease to the preferred-return hurdle, and no other GP-favorable waterfall changes

• no crystallization of carried interest for rolling investors

ILPA also says there should be no minimum roll threshold as a condition of offering status quo, and that relevant side-letter risk and governance terms should carry into the new vehicle.

A roll on new terms is a different election. New LPs paying today's price often want a new hurdle measured from the transaction NAV and a carry construct that starts at that price. Rolling LPs then compare status quo economics against those new terms, plus the cash alternative.

LPAC and the conflict process

The conflict is structural. The GP is the seller's manager and the buyer's manager. It may crystallize carry on the sold strip, earn fees on a longer-lived vehicle, and negotiate a staple (new primary capital tied to the bid). ILPA's 2023 guidance treats those as conflicts to bring to the Limited Partner Advisory Committee whether or not the LPA already "pre-clears" continuation funds. ILPA recommends against fundraising LPA terms that pre-clear these conflicts.

What ILPA describes as a well-run LPAC process:

• The GP presents the rationale early — why a CV rather than a third-party sale, a term extension, or co-investment — including outlook, capital needed, time to realization, and an exit plan for the new vehicle.

• The LPAC reviews process and conflicts, with time for an in-camera session and access to the transaction advisor as a fund expense, then votes on whether to waive conflicts associated with the process. ILPA says the LPAC should have 10 business days for that review.

• No less than 10 business days before terms go to LPs for election, the GP reconvenes the LPAC as a group on the principal terms of the acquisition agreement.

• Disclosures to all LPs at election should include bid count and pricing, any discounted acquirer economics, stapled primary terms, fee and carry in dollars as well as percentages, crystallized carry rolled (if any), and other material LPA changes.

A fairness opinion is not a statutory requirement. ILPA notes that an independent fairness opinion, a partial third-party sale, or an arm's-length minority stake can help the LPAC assess price.

Advisers that file Form PF should treat an adviser-led secondary as a reporting event. In May 2023 the SEC adopted Form PF amendments requiring private equity fund advisers to report an adviser-led secondary transaction quarterly, within 60 days of fiscal quarter-end. (SEC press release 2023-86) That filing is confidential and does not replace the LPAC pack.

Carry: crystallization, roll, and a negotiated reset

Carry is where rolling LPs and incoming buyers often want opposite things. Three ideas, none of them "standard," none of them advised here.

Crystallization. The GP is treated as having earned carry on the sold strip at the transaction price, paid in cash rather than left as an uncrystallized allocation. ILPA's 2023 status-quo definition says there should be no crystallization of carried interest for rolling LPs. For carry that relates to selling LPs' interests, ILPA says accrued carry should be rolled into the new vehicle in almost all cases, with a written explanation if it is not.

No change to the waterfall for rollers. Status quo, as ILPA defines it, also means no higher carry rate, no lower preferred-return hurdle, and no other GP-favorable waterfall change for rolling LPs. See carried interest explained for how carry, hurdles, and catch-up fit in a fund LPA, and distribution waterfalls, American vs European for whole-fund versus deal-by-deal timing.

A carry reset. Incoming capital is buying at today's price. Buyers often ask for a new preferred return that starts from the CV's entry NAV, and for carry measured on value created after that entry — a new clock. That package is a negotiated term among the GP, rolling LPs, and the acquirer — not a market default and not a recommendation. If it appears in the election pack, compare it in dollars against status quo and against cash.

ILPA's 2023 economics section also says there should be no increase to the management fee basis or percentage for rolling LPs, and that fee and expense allocation should follow who benefits. Formation costs of the new vehicle, in that framing, sit with rolling LPs and the acquirer; selling LPs bear their share of sale costs.

A roll is a new partnership interest. The CV will file a partnership return and issue Schedule K-1s. Cash LPs exit; rolling LPs take a new capital account. Follow-on calls can dilute rollers who do not fund. Tax basis is a fact for a tax advisor.

What this is not

It is not a liquidity rating, a volume forecast, or a how-to for a buy-side secondary SPV. Allocations does not sell a packaged "continuation vehicle" SKU. The published Standard SPV stack is a vehicle wrapper. A GP-led CV still needs its own LPA, conflict process, bid process, and election mechanics — fund documents and counsel work.

Frequently asked questions

What is a GP-led continuation vehicle?

A new fund or LLC, managed by the same GP, that acquires one or more assets from a fund the GP already manages as that fund nears or passes its term. Existing LPs elect cash or a roll. Incoming buyers supply the cash selling LPs receive.

How is that different from a secondary SPV?

A secondary SPV pools new investors to buy existing shares from a holder. A GP-led CV restructures assets already inside a GP's fund, with an LP election and LPAC conflict process. See the secondary SPV setup guide.

What is a status quo roll?

As ILPA defined it in 2023: a roll with no higher management fee rate, no change in fee base for rolling LPs, no higher carry rate or lower hurdle or other GP-favorable waterfall change, and no crystallization of carry for rolling LPs. Confirm whether the election pack actually offers that option.

What does the LPAC do in a GP-led CV?

It reviews conflicts and process. It does not owe a fiduciary duty to other LPs. ILPA describes an early rationale session, an in-camera discussion, a process-conflict vote, and a later session on acquisition terms before LP election.

Is a carry reset standard?

No. A reset of the hurdle and carry clock off the transaction price is a negotiated term with incoming capital. ILPA's 2023 status-quo option for rolling LPs is the opposite posture: no crystallization, no higher carry, no lower hurdle. Read the actual LPA.

Do LPs have a deadline to elect?

The selling fund's documents control. ILPA's 2023 guidance says no less than 30 calendar days or 20 business days, and that a missed election should be treated as a sale, not a forced roll.

This article is for informational purposes only and is not legal, tax, or investment advice. Continuation-vehicle terms, conflict waivers, and tax consequences depend on the selling fund's LPA, the continuation vehicle documents, and your facts. ILPA guidance is not law. Confirm with qualified counsel and tax advisors. Allocations Securities, LLC (dba AllocationsX) is a member of FINRA and SIPC.