Continuation funds provide liquidity to limited partners (LPs) by acting as GP-led secondary transactions. In these structures, a general partner (GP) establishes a new fund vehicle to hold assets from an existing fund that is approaching the end of its term.
LPs receive liquidity through the following mechanisms:
- The Cash Exit Option: When a GP initiates the transfer of assets into a continuation vehicle, existing LPs are offered a choice. They can opt for a cash exit, allowing them to realize gains and receive immediate liquidity based on a reset valuation of the assets.
- Secondary Market Sales: The GP facilitates the sale of existing LP interests to new institutional investors. This process effectively replaces the capital of exiting LPs with that of new investors who wish to participate in the assets’ future growth.
- Asset Valuation: To ensure LPs receive a fair price during the liquidity event, the process typically involves independent third-party valuations and fairness opinions. This protects stakeholders by establishing a fair market price for otherwise illiquid assets.
- Flexible Exit Timing: Rather than being forced into a binary outcome or a premature asset sale at the end of a traditional fund’s life, LPs gain the flexibility to recycle capital while the GP continues managing high-performing assets.
Related FAQs
-
What Questions should I Ask when Choosing a Peo Provider?
Read More »: What Questions should I Ask when Choosing a Peo Provider?When evaluating potential Professional Employer Organization (PEO) providers, it is essential to ask targeted questions that reveal how well their services align with your specific business needs. Focusing on costs, compliance, and technology will help ensure a successful partnership. Key…
-
Can a Peo Help with Payroll and Benefits Administration?
Read More »: Can a Peo Help with Payroll and Benefits Administration?Yes, a Professional Employer Organization (PEO) is specifically designed to handle payroll and benefits administration through a co-employment model. In this arrangement, the PEO acts as the employer of record for administrative purposes while you maintain daily control over your…
-
How does Co-employment Work with a Peo?
Read More »: How does Co-employment Work with a Peo?Co-employment is a collaborative partnership where a Professional Employer Organization (PEO) and a business owner share employer responsibilities. In this model, the PEO acts as the employer of record for administrative purposes, while the business owner retains full control over…
-
How Much does a Peo Typically Cost for Hr Outsourcing?
Read More »: How Much does a Peo Typically Cost for Hr Outsourcing?The cost of a Professional Employer Organization (PEO) typically depends on the company’s size and the specific services selected. Most PEOs use a pricing structure based on a percentage of the business’s gross payroll, which generally ranges from 2% to…
-
What are the Benefits of Using a Peo for Small Businesses?
Read More »: What are the Benefits of Using a Peo for Small Businesses?Using a Professional Employer Organization (PEO) offers several strategic benefits for small businesses, primarily by providing access to enterprise-level resources through a co-employment model. Key advantages include: Cost Savings and Efficiency: Businesses can save up to 27 percent on employee…