The ‘Can’t Let It Go’ Trade: How Continuation Funds Took Over Private Market Secondaries

TL;DR

• The private markets secondary market hit a record ~$121 billion in H1 2026, according to Evercore data reported by Bloomberg.
• For the first time in four years, GP-led deals (mostly continuation vehicles) made up the majority of volume, at 54%.
• Full-year 2025 volume was a record $226 billion; insiders surveyed by William Blair expect around $250 billion in 2026.
• Managers are using continuation vehicles to hold on to their best “trophy” assets instead of selling them in a slow exit market.
• Secondaries are spreading beyond buyouts into private credit and infrastructure, and attracting retail and institutional money alike.

Quick Answer: How Big Is the Secondary Market?

The secondary market, where investors buy and sell existing stakes in private funds and assets, is now one of the fastest-growing corners of private markets.

According to Evercore, global secondary volume crossed $120 billion in the first half of 2026, another record. That came after 2025 closed at $226 billion, itself an all-time high.

The forecasts keep moving up. Houlihan Lokey’s survey pointed to more than $225 billion in 2026, and a William Blair survey of market insiders puts the figure closer to $250 billion.But the more interesting story is not how big the market is. It is who is driving it.

What Is a Continuation Vehicle?

A private equity fund has a fixed life, typically around ten years. Before the clock runs out, the manager (GP) is expected to sell its portfolio companies and return cash to investors (LPs).

A continuation vehicle offers another route. The GP sets up a new fund that buys one or more assets from the old fund. Existing LPs choose to either cash out or roll their stake into the new vehicle, and fresh secondary buyers supply the capital for those who exit.

The result: the GP keeps managing a company it believes still has room to grow, and investors who want liquidity get it.

Secondary deals come in two broad flavours:

• LP-led: an investor sells its stake in a fund to another buyer, often to rebalance or raise cash.
• GP-led: the manager initiates the transaction, most often through a continuation vehicle.

Why Are GP-Led Deals Overtaking LP-Led Deals?

In H1 2026, GP-led transactions accounted for 54% of secondary volume, the first time in four years they have outpaced LP-led sales.

The reason is what the market has started calling “trophy assets.” These are high-conviction companies that managers don’t want to sell, either because exit valuations are disappointing or because they believe the best returns are still ahead.

The exit environment makes this more attractive. M&A and IPO markets have improved but remain slower than many managers would like, and LPs are pushing hard for distributions. A continuation vehicle solves both problems at once: the GP holds the asset, and the LP gets cash.

Advisers say the practice has gone mainstream. Paul, Weiss’s Marco Masotti has noted that almost all of the firm’s private funds clients are either considering a continuation fund or already running one.

In effect, the continuation vehicle is redefining what an “exit” means in private equity.

Why Do Investors Want Secondaries?

For sellers, the appeal is simple: liquidity. With distributions slow, LPs use secondaries to turn paper value into cash (DPI) and free up capital for new commitments.

For buyers, the appeal is speed and visibility. They buy into assets that are already a few years old, so there is less blind-pool risk and cash comes back sooner. Preqin’s research finds the median PE secondaries fund turns cash-flow positive two years earlier than an equivalent primary fund.

Capital is following. Preqin reports that PE secondaries funds are now raising money faster than primary funds, and large managers are building or buying secondaries platforms to gain scale.

Smart Liquidity or Conflict of Interest?

Continuation vehicles are not without critics, and the debate is getting louder as volumes grow.

The concern: the GP effectively sits on both sides of the deal. It is selling from one fund it manages to another fund it manages, and it helps set the price. LPs worry about whether valuations are fair and whether they are being nudged toward rolling over. Continuation vehicles also typically reset fees and carried interest for the manager.

The defence: supporters argue these deals let investors stay in their best-performing assets rather than forcing a sale at a poor price. LPs get a real choice to exit or stay, and independent secondary buyers pricing the deal act as a market check.

Where you land often depends on governance: fairness opinions, competitive pricing processes and LP advisory committee oversight are what separate a well-run continuation vehicle from a questionable one.

What Comes Next for Secondaries?

The market is broadening well beyond buyouts. Houlihan Lokey’s survey finds buyout still leads investor interest (86%), but growth equity (47%) and private credit (24%) are gaining ground. Infrastructure secondaries are also emerging, though they make up only about 2% of infrastructure AUM, according to Preqin.

The investor base is widening too. New money is flowing in from both institutions and retail investors, through evergreen and semi-liquid vehicles.

On timing, William Blair describes LP-led sellers as “slightly motivated” as of September 2026, with pricing better than in the spring. It suggests Q4 2026 could be a good window to launch an LP-led sale, which is not always true at year-end.

There is a natural cycle at work:

Exit markets slow → GPs hold trophy assets via continuation vehicles → LPs get liquidity through secondaries → that liquidity is recommitted to new funds.

Secondaries have gone from a niche, distressed-seller market to a core portfolio management tool. The next chapter of private equity may be written as much in the secondary market as in the primary one.

Brand Manager

Aayushi Thakur

Frequently Asked Questions

Q: How big is the private markets secondary market?

A: Secondary volume reached about $121 billion in H1 2026, a record, after a full-year 2025 total of $226 billion.

Q: What is a continuation vehicle?

A: A new fund set up by a private equity manager to buy one or more assets from an older fund it manages, so it can keep holding them while giving existing investors the option to exit.

Q: What share of secondaries are GP-led?

A: GP-led deals made up 54% of secondary volume in H1 2026, the first time in four years they exceeded LP-led deals.

Q: Why do investors like secondaries?

A: Sellers get liquidity; buyers get visibility into assets and faster cash flow. The median PE secondaries fund turns cash-flow positive two years before an equivalent primary fund, per Preqin.

Q: What is the main criticism of continuation vehicles?

A: The manager is on both sides of the transaction, which raises questions about pricing fairness and fee resets.

Q: Where is the secondary market expanding?

A: Into private credit, growth equity and infrastructure, and toward retail investors through semi-liquid vehicles.

Sources

• Evercore data via Bloomberg, reported in Trophy assets push private markets secondaries to record $121bn, 2026
• Alternatives Watch, Evercore: H1 2026 secondaries volume tops $120 billion, July 2026
• William Blair, Another Quarter, More Growth for Secondaries, 2026
• Preqin, Secondaries in 2026, July 2026
• Houlihan Lokey survey via Alternative Credit Investor, Secondaries market to hit $225bn, March 2026
• UBS, Secondary market activity H1 2026
• Paul, Weiss, Marco Masotti quoted in FundFire on rise in GP-led deals