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By Gregory Fine, Kari Harris, Kurt Steinkrauss and Matthew Simpson, from U.S. law firm Mintz.
In 2025, the private equity landscape will be shaped by several key trends, including the expansion of continuation vehicles as a vital liquidity tool, heightened regulatory scrutiny and antitrust pressures introducing both challenges and opportunities, and interest rate cuts and evolving buyer-seller risk tolerance creating a more complex deal environment.
The Evolution of Continuation Vehicles into 2025
Continuation vehicles have gained prominence as a strategic option for private equity sponsors seeking liquidity for investors without having to exit high-performing assets prematurely and will continue to do so into 2025. Unlike the passing SPAC trend, CVs provide a sustainable, strategic option in today's tight exit market, offering flexibility that traditional [exit opportunities] lack.
Sponsors are increasingly open to re-evaluating their approach to CVs, viewing them as a tool to rebalance LP pools, manage specific assets, and maintain growth within their portfolios. This shift includes educating LPs on the benefits of CVs and structuring them to respect fiduciary duties and avoid unintended economic consequences.
The flexibility CVs provide allows sponsors to retain assets that have outgrown the original fund, especially in cases where the asset continues to perform well but requires a different return profile or risk tolerance...................... To view our full article Click here
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