Continuation vehicles unlock LP liquidity while preserving ownership of high-conviction assets. But in our experience, many back offices were not designed for the resulting investor cohorts, economic exceptions and additional disclosures.

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Why now

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Dealmaking and liquidity are gradually returning. For many sponsors, continuation vehicles remain the most practical route to return capital, retain prized assets and align new capital with fresh horizons. The structures work; the strain is operational. Standard models assume a single LP cohort, uniform economics and one reporting cadence.

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By the end of Q3 2025, secondaries had reached $165 billion in transaction value (including $60 billion in Q3 alone) and GP-led secondaries accounted for approximately 16% of sponsor exit volume, providing evidence that continuation vehicles are a mainstream solution rather than an edge case¹. As a further indicator of momentum, there were approximately 105 sales to continuation vehicles year-to-date at that point, with the pace expected to continue². Sponsors are sequencing continuation vehicles alongside delayed exits, while auditors and boards intensify scrutiny of carry history, valuation lineage and communications control.

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There are, however, a number of operational considerations.

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The operational problems: where we see back office issues

1. Investor cohorts and rights - Rolling LPs, new entrants, stapled commitments (new money tied to future funds) and cross-fund participation create distinct investor cohorts with non-standard economics and side-letter terms. As a result, cap table logic fragments across spreadsheets, increasing error risk and delaying distributions.
2. Waterfalls and carry - Historical data and mechanics must migrate exactly, including held-back amounts, legacy carry, true-ups and escrow. Any mismatch between old and new mechanics compounds at each distribution cycle and invites audit friction.
3. Valuation lineage and governance - Legacy models meet new terms, voting and governance oversight. Without transparent lineage from assumptions to outputs, valuation debates restart every quarter.
4. Quarter-end calendar risk - If interim checkpoints are weak, quarter-end becomes a catch-up exercise. Teams switch between migration clean-up and investor reporting, which extends the close.
5. Communications load - Rolling LPs and new investors require different packs, narratives and timings. Version control becomes a risk of its own.
6. Treasury and payments exposure - Manual payment files, ad hoc FX handling, and inbox-based approvals create control gaps and rework.

Problem, operational response and outcome

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In our experience, each problem can be paired with a targeted operational response and a measurable outcome:

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Investor cohorts and rights

• Operational response: Profile and clean the existing dataset; reconcile all cohorts to an agreed cut-off date, then review and validate distributions using migrated historical data, including held-backs, escrow and prior true-ups, before locking the tested engine to prevent off-model calculations.
• Outcome: Consistent preferences logic and no manual re-keying; reduces cohort-related reconciliation items by 30–50%.

Waterfalls and carry

• Operational response: Rebuild the carry engine from source principles (hurdles, catch-ups, lookbacks and allocation rules), then tie every variable back to migrated history. Test the engine with a full dry waterfall, including held-backs, escrow and prior true-ups, and reconcile outputs to the legacy model before cutover. Only then lock mechanics and prohibit off-model calculations.
• Outcome: Fully aligned carry mechanics and fewer reconciliation cycles; cuts time-to-first distribution by 1–2 weeks.

Valuation lineage and governance

• Operational response: Produce traceable evidence packs: inputs, model logic and outputs tied to the general ledger, with change logs.
• Outcome: Reviewers interrogate numbers rather than chase files; shortens valuation review cycles by 20–30%.

Quarter-end calendar risk

• Operational response: Insert defined gates (cap table, carry engine, valuation pack, communications) two to three weeks before quarter-end, each with a single accountable owner.
• Outcome: Shorter closes and fewer last-minute exceptions; brings quarter-end within target calendar two cycles in a row.

Communications load

• Operational response: Pre-build segmented packs for rolling LPs and new capital; enforce a content freeze so late changes recompute through the model rather than spawn new spreadsheets.
• Outcome: Accurate, on-time delivery; reduces investor Q&A volume by 20–40%.

Treasury and payments exposure

• Operational response: Generate payment files from the same core data; apply dual approvals and rule-based FX; keep critical steps out of inboxes.
• Outcome: Tighter controls and first-time-right payments; zero manual overrides on payment runs.

What an administrator should deliver (what ‘good’ looks like)

• One structured dataset, many views. A single, computable core of data powers every schedule and investor view; late changes recompute through the same model.
• Evidence as you go. Every material output traces to inputs and logic tied to the general ledger, with change logs and exam-ready evidence packs.
• Defined gates and owners. Cap tables, carry engines, valuation packs and investor communications are signed off before quarter-end, each with a single accountable owner.
• Speed with control. Live report generation and recomputation compress timelines without weakening governance.
• Multidisciplinary pods. Fund accounting, regulatory and company secretarial expertise resolve issues at source; treasury is aligned on payment controls.
• Migration discipline. Mid-cycle checkpoints and cutover plans that do not break quarter-end; dry waterfalls rehearsed before cash moves.

Actions to take before you launch

1. Codify the economics for all investor cohorts; document exceptions early.
2. Migrate with proof via a reconciliation pack that an auditor could sign today; include sample distributions and sensitivities.
3. Rehearse distributions with a dry waterfall; fix mismatches before cash moves.
4. Stabilize the calendar with interim gates for the first two quarter-ends; run weekly traffic reviews until BAU.
5. Segment communications for rolling LPs and new capital; build real document sets and timelines, then test them.
6. Name owners for cap tables, carry, valuation and investor communications; make escalation paths explicit.

Questions to answer before the board approves

• Have we agreed and documented all economic exceptions and side-letter impacts?
• Can we evidence the migration of carry history and prior true-ups?
• By what date can we dry-run and sign the first-distribution mechanics?
• Which investor cohorts require differentiated reporting, and when will those packs be ready?
• Where, if anywhere, do numbers leave the system and live in spreadsheets and what is our plan to eliminate or control those steps?

Conclusion

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Continuation vehicles are no longer exotic, but they do need careful planning, as the issues are not the same as a normal fundraise: one structured dataset, examinable evidence, rehearsed mechanics and disciplined calendars.

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_{[1] Ropes & Gray: Secondaries Q3 2025 Update}

_{[2] NEPC, Quarterly Private Markets Report: Q3 2025}