November 6, 2026 · 5 min read
Continuation Fund vs Private Equity Secondaries: Key Differences
How a continuation fund fits into the secondary market, who sits on each side of the deal and what each route means for a fund investor.
- Private equity & funds
Secondaries vs continuation funds is a question of whole and part. Secondaries are the market for buying existing stakes in private funds. A continuation fund is one kind of secondary deal, led by the fund manager. It moves companies from an old fund into a new vehicle, and investors choose to sell or stay in.
If you hold a stake in a private fund, you have two routes to cash before the fund ends. You can sell your stake to a buyer yourself. Or the manager may offer a continuation fund, where you choose to take cash or roll. In both cases, the price is usually set against the fund’s reported value.
$118B
Global secondary volume in the first half of 2026
53%
Share led by fund managers, $62B, against $56B sold by fund investors
68%
Continuation funds that held a single company
20 days
Business days ILPA says investors should get, at least, to decide whether to sell or roll
Continuation Fund vs Private Equity Secondaries: What Is the Difference?
The table compares a continuation fund with the classic secondary sale, where a fund investor sells its stake. Criteria: what each is, who starts it, who uses it, legal and tax treatment, risk, liquidity and a typical example.
In an LP-led sale, the investor changes. In a continuation fund, the vehicle changes
As of November 2026 · Jefferies, Global Secondary Market Review (07.2026); ILPA Continuation Vehicle Guidance (10.2026); 26 U.S.C. §741. Examples in the last row are illustrative.
Continuation Fund vs Secondary Fund: Who Is on Each Side?
The two names sound alike but sit on opposite sides of the deal. A continuation fund holds the companies. A secondary fund is a buyer: a fund raised to purchase existing stakes. In a continuation fund deal, secondary funds usually provide the new money that pays the investors who leave. Read more on the market in private equity secondaries.
Secondary funds buy in both kinds of deal. In an LP-led sale, they take over an investor’s whole fund stake. In a GP-led deal, they buy into a vehicle built around one or a few companies. Jefferies puts the capital set aside for secondaries at $290B in mid-2026.
GP-led deals were 53% of volume in the first half of 2026. Jefferies also counts 82 of the top 100 sponsors by assets as having used one.
How Each Deal Is Priced and Protected
In an LP-led sale, the buyer bids against the fund’s net asset value (NAV), the manager’s estimate of what the holdings are worth. In the first half of 2026, LP portfolios sold at 87% of NAV on average, Jefferies reports. Venture stakes averaged 79%.
In a continuation fund, the manager effectively sells to itself. So the price needs outside proof. ILPA, a trade body for fund investors, asks for a competitive auction run by an adviser. It adds that the price should be supported by an independent fairness opinion or similar (ILPA, 2026). Investors who roll should face no overall increase in fees or carry, the manager’s share of profit.
No US federal rule now requires that opinion. The SEC adopted one for adviser-led secondaries, but the Fifth Circuit vacated it on June 5, 2024 (SEC). The fund agreement and its LP advisory committee remain the main checks.
Tax Treatment of a Sale and a Roll
Under US rules, selling a stake in a fund taxed as a partnership is a sale of a partnership interest. The gain or loss is generally capital, with some exceptions (26 U.S.C. §741). That applies to an LP-led sale and to selling in a continuation fund deal. A roll is meant to keep your position. ILPA says rolling investors should keep substantially equivalent tax attributes, but the result depends on the structure. Your share of income keeps arriving on a Schedule K-1.
General Information, Not Tax Advice
These are US federal rules in outline. The tax result of a sale or a roll depends on the structure and your own facts. Rules differ by country. Take the election pack or the sale agreement to a qualified adviser.
Continuation Fund vs LP-Led Sale: A Verdict on Each
Continuation Fund
- For
- Every investor gets a choice at the same price. You can stay in a company the manager still backs. Fees and carry for rolling investors should not rise.
- Against
- The manager sets terms for both sides. Rolling concentrates your money in one or a few companies. The window to decide can be short.
Verdict: a continuation fund suits an investor who knows the company and trusts how the price was tested. ILPA notes that when investors cannot study the assets in time, many end up choosing to sell.
LP-Led Secondary Sale
- For
- You choose when to sell. You can exit the whole fund at once, including future calls.
- Against
- Prices are often below NAV, 87% on average in H1 2026. The GP must approve the buyer.
Verdict: an LP-led sale suits an investor who needs cash or wants to leave a manager. It usually means accepting a price below NAV. Compare the bid with what you expect the fund to pay out if you wait.
Secondaries are the market. A continuation fund is one deal type in it, started by the manager. A secondary fund is usually the buyer on the other side.
What It Means for a Fund Investor
If a continuation fund offer arrives, check how the price was tested and what the new vehicle charges. Check how long you have and what happens if you do not answer. If you plan to sell your stake yourself, remember that the buyer takes over your unfunded commitment, which affects the price.
Shares in a single private company also trade second-hand. That is a different market, covered in secondary transactions. How a continuation fund compares with an open-ended fund is in continuation fund vs evergreen fund. The investor and manager roles are in general partner vs limited partner.
Common Mistakes
- Using the two terms as synonymsA continuation fund is one kind of secondary. Most LP-led sales involve none.
- Confusing a continuation fund with a secondary fundThe first holds the companies. The second is usually the buyer.
- Treating NAV as a priceLP portfolios sold at 87% of NAV on average in H1 2026.
- Missing the election deadlineFind out which choice applies if you do not answer.
The Terms This Page Uses
- Secondaries
- The market for buying and selling existing stakes in private funds.
- Continuation fund
- A new vehicle, run by the same manager, that buys one or more companies from an older fund.
- Secondary fund
- A fund raised to buy existing stakes in private funds or companies.
- LP-led secondary
- A fund investor sells its stake to a new buyer.
- GP-led secondary
- The manager moves assets into a new vehicle and lets investors sell or roll.
- Roll
- To keep your stake by moving it into the continuation fund in place of taking cash.
- Fairness opinion
- An independent firm’s view on whether a transaction price is fair.
- Unfunded commitment
- The part of a fund commitment not yet called. A buyer of an LP stake takes it over.
What People Ask About Continuation Funds and Secondaries
Yes. It is a GP-led secondary, started by the fund manager. The other main type is the LP-led sale, where an investor sells its own stake.
Mostly secondary funds and other institutions that buy existing private assets. Their cash pays the old fund’s investors who choose to sell. Investors who roll stay in alongside them.
No. Each investor chooses to sell for cash or roll. ILPA Principles say investors who roll should be able to keep their existing economic terms.
Not under current US federal rules. The SEC rule that required one in adviser-led secondaries was vacated in 2024. ILPA asks for an independent fairness opinion or similar evidence of price.
Where the Figures on This Page Come From
Rules and figures were last checked on November 6, 2026. Market volumes and prices are Jefferies estimates based on its own data. ILPA guidance is an industry standard without the force of law. Rules and tax are US federal rules. Examples are illustrative.
- 01Jefferies07.2026Global Secondary Market Review — H1 2026 volume $118B, LP-led $56B and GP-led $62B, single-asset CVs 68%, pricing as % of NAV, dedicated capital $290B, 82 of top 100 sponsors
- 02Institutional Limited Partners Association10.2026Continuation Vehicles: Advancing Alignment Through Best Practices — 20 clear business days, auction and fairness opinion, fee and carry terms for rolling LPs
- 03Institutional Limited Partners Association06.2019ILPA Principles 3.0 — adviser to solicit bids, status quo option for rolling LPs
- 04US Securities and Exchange Commission10.31.2024Announcement Regarding Private Fund Advisers Rules — Rule 211(h)(2)-2 vacated by the Fifth Circuit on 06.05.2024
- 05Cornell LII · 26 U.S.C. §741Current lawSale of a partnership interest treated as sale of a capital asset, subject to §751
This page explains how a market works. It is not investment advice, not a recommendation of any security, strategy or company, and not an offer to sell or a solicitation to buy anything. Private companies may never list or be acquired, positions in them can be illiquid for years, and the entire amount invested can be lost. Figures are accurate as of the dates shown and change. Requirements for investor status, and the tax treatment of a private holding, differ by jurisdiction — the jurisdiction is named wherever this page discusses either. Prepared by the AXEVIL Capital research team. Tax rules described here are United States federal rules unless another jurisdiction is named; they change every year and depend on your own facts. Nothing here is tax advice — take your documents to a qualified adviser.
What closed on the private market in the past two weeks
The rounds that priced, the tender offers that opened and the listings that filed — with the structure of each deal and the date on every figure. Written by the team that reads the paperwork.
Where to go from here
Private markets & secondariesWhat Are Private Equity Secondaries? Definition and ExamplesSecondary-market private equity explained: how fund investors sell stakes early, how continuation funds work, how stakes are priced and 2026 market volumes.
Private equity & fundsContinuation Fund vs Evergreen Fund: Key Differences ExplainedContinuation fund vs evergreen fund: a vehicle that keeps one company longer against a fund with no end date. Liquidity, risk, US tax and ILPA's 2026 guidance.
Private markets & secondariesWhat Is a Secondary Transaction? Definition, How It Works and ExamplesSecondary shares meaning: existing shares sold by one holder to another, so the company raises nothing. How private-company secondaries work, with an example.