Until some of the more inefficient aspects of the continuation fund process are smoothed out, these deals are not likely to become routine exit options alongside IPOs and strategic sales.
A disconnect exists in the industry between GPs who view continuation funds as a desirable way to hold certain assets beyond the limits of a traditional private equity fund, and LPs who generally would prefer a regular exit.
A footnote in the US Securities and Exchange Commission's new rules suggests continuation funds structured as cross fund trades won't be subject to third-party fairness opinion and valuation letters.
The opening up of the market for pension fund-issued collateralized fund obligations could represent a major avenue of liquidity relief for other investors.