Go It Alone or Bring in an Investment Bank for a GP-Led Continuation Vehicle?

At F2H, we bring white-glove advisory to secondaries, capital raising, and M&A under $150m – delivering the sophistication of top-tier investment banking to small GPs, LPs, and companies. If you’re thinking of running a continuation vehicle process or any other liquidity solutions for LPs, contact us today to start the conversation.

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Introduction

Continuation funds have become one of the fastest-growing segments of private equity secondaries. In a continuation vehicle, a GP moves one or more portfolio companies from an existing fund into a new special-purpose fund. Existing LPs can choose to sell for liquidity or roll their interests into the new vehicle.

These transactions solve real challenges: they provide liquidity for LPs, extend ownership of prized assets, and allow GPs to continue creating value. But they are also among the most complex—and conflicted—processes in private markets.

GPs face a key decision: should they hire an investment bank advisor to run the continuation vehicle process, or attempt to handle it internally?

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What “going it alone” means for GPs

• Direct negotiation with a lead buyer: The GP selects one or two secondary investors to anchor the continuation fund.
• Internal process management: The GP manages data rooms, diligence, valuation discussions, and LP communications.
• Cost savings: No advisor fees (often 1–5% of NAV transacted).
• Control: The GP controls all outreach, buyer selection, and timing.
• Risks: Without competition or independent validation, LPs may question whether the process is fair and whether valuations reflect market terms.

Going it alone might work for very small, straightforward transactions with highly aligned LPs, but in most cases, the governance risks are highly significant.

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What an advisor brings to continuation vehicle processes

Independent validation and optics

• Advisors provide a fairness-driven process that reassures LPs.
• They reduce the perception that the GP set pricing unilaterally.

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Buyer access and competition

• Advisors bring in multiple secondary funds and institutional buyers to create competitive tension.
• They expand beyond a single “lead buyer” dynamic, often improving price and terms.

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Valuation and structuring expertise

• Advisors benchmark asset valuations against comparable secondary transactions.
• They help structure terms such as GP commitment, carry resets, and investor rollover options.

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Process management

• Advisors handle outreach, NDAs, data room management, diligence coordination, and bid timelines.
• They synchronize timing across multiple bidders.

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Governance protection

• Advisor-led processes create a record of fairness that protects the GP from reputational or legal challenge.

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Pros of hiring an advisor

• Higher valuations: Competitive tension improves outcomes for selling LPs.
• Transparency and fairness: LPs are more likely to support continuation vehicles run by third parties.
• Execution certainty: Advisors know which buyers have capital and close reliably.
• Reputational protection: Demonstrates fiduciary discipline and mitigates conflict-of-interest risk.
• Bandwidth: Frees GP teams to focus on portfolio management.

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Costs and downsides of hiring

• Fees: Advisory fees (1–5% of NAV) can be significant on smaller continuation vehicles.

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When going it alone might work

• Highly aligned LPs: When LPs explicitly support a bilateral arrangement.
• Pre-agreed lead buyer: Where pricing is straightforward and the LPAC has approved.
• Low sensitivity: Situations where governance optics are less critical (rare).

But for most material continuation vehicles, these conditions rarely apply.

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Decision framework

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Best practices if hiring

• Select true secondaries specialists: Continuation funds are niche—choose advisors with direct experience, not just M&A bankers.
• Align on process scope: Agree on buyer outreach breadth to balance confidentiality and competition.
• Engage LPAC early: Bring in the LP Advisory Committee before launching the process.
• Negotiate fees: Ensure advisory fees scale reasonably to transaction size.
• Stay engaged: Advisors should run the process, but the GP must lead on strategy and investor communication.

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Conclusion

Continuation vehicles are among the most complex and conflict-sensitive transactions in private equity. While GPs can theoretically manage them alone, doing so often undermines LP trust and risks reputational damage.

Advisors bring market access, competition, structuring expertise, and governance protection—often improving both outcomes and LP confidence. For most continuation funds, particularly those involving institutional LPs and meaningful NAV, hiring an advisor is the safer and more effective choice.

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At F2H, we bring white-glove advisory to secondaries, capital raising, and M&A under $150m – delivering the sophistication of top-tier investment banking to small GPs, LPs, and companies. If you’re thinking of running a continuation vehicle process or any other liquidity solutions for LPs, contact us today to start the conversation.