The continuation fund has become the buyout industry's favourite tool and its most awkward conversation. The same firm sits on both sides of the table.
The conflict is structural
The manager knows the asset better than any buyer, has an incentive to keep its best performers, and sets the terms of the new vehicle. Independent valuations help, but they are commissioned by the very party whose conduct they police.
The healthiest version of this market reserves continuation funds for genuine trophy assets, priced against real third-party interest.