Continuation Vehicles Report 2025: Maturing Market Finding Deal Term Norms

LONDON and NEW YORK: April 3, 2025: Morgan Lewis has published its Continuation Vehicles Report 2025, identifying notable trends in the key legal terms and provisions from 44 GP-led continuation vehicles (CVs) launched from Q1 2024 to Q1 2025, and ranging in size from $110 million to $3.25 billion, and providing insight into the evolving and specialized terrain of secondaries transactions.

Some key findings:

• Stabilization of management fees: The trends indicate a convergence of management fees to 1% or below, driven by increased investor pressure on sponsors to reduce fees, market dynamics, and increased competition among GP-led transactions.
• Certainty around operational costs: 90% of CVs had a cap on organizational costs and expenses, 80% of CVs paid for lead investor expenses on a capped basis, and 93% of CVs had no cap on operational costs and expenses.
• Tiered carry: 75% of CVs included a tiered waterfall with “super carry,” with the range of carried interest being between 10% and 30%. 
• Follow-on investments: 84% of CVs prioritize the use of unfunded commitments to fund follow-on investments, which locks in dry powder for the managers to use to fund future operations or acquisitions that may be accretive to the ultimate value.
• Duration: 50% of all CVs have a term of five years, with 88% of CVs having the possibility of a two-year extension past the initial term.

“We’re witnessing the maturing of a CV market that now represents nearly 50% of all secondary transactions,” said Ted Craig, partner at Morgan Lewis. “The convergence of average management fees to 1% or below is just one example of where terms continue to settle and find market norms that are leading to agreeable terms.”

“The findings in our report and the establishment of certain market norms are indicative of the ongoing certainty and confidence in accessing a deal type that was almost nonexistent 10 years ago, which has had a self-reinforcing effect as more deals are coming to the market and participants have greater assurance that transactions will be successfully consummated,” adds Joseph Zargari, partner at Morgan Lewis. 

“The United States dominates the deal flow; however, we see continued interest in Europe and elsewhere,” said Tayne Rankine, partner at Morgan Lewis. “The attractiveness of CV transactions in this dynamic market looks set to continue.”

Morgan Lewis is a trusted adviser to clients in the secondary transaction sector, including secondary funds, institutional investors, and other participants buying and selling private fund interests and parties involved in GP-led secondary transactions. Our vast market knowledge and involvement in a range of transaction structures, market instruments, asset classes, and jurisdictions make us one of the most comprehensive secondary transaction teams in the world. Learn more about Morgan Lewis’s secondary transactions practice.

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