The Takeaway: A Q&A With Sandro Galfetti on the Rise of Continuation Vehicles in Europe

What is driving the recent growth in the CV market?

The growth in CVs is being driven, first and foremost, by a fundamental shift in how GPs think about liquidity, ownership, and value creation, moving beyond the old binary of “hold to exit” versus “sell now.” What was once branded a niche mechanism—often associated with “zombie funds” or end-of-life portfolios—has evolved into a mainstream tool for retaining a firm’s most compelling assets. Single-asset CVs are now anchored around high-conviction, high-performing businesses where the GP sees clear additional value creation and wants to remain actively involved for a second phase of growth.

This evolution has coincided with a period in which traditional exit routes have been constrained. IPOs have largely been unavailable, strategic buyers remain selective and disciplined on valuation, and sponsors may hold substantial capital while remaining cautious in deploying it. In this environment, CVs create a compelling alignment of interests—offering liquidity for LPs, continued ownership and optionality for GPs, and access to high-quality deal flow for secondary buyers with capital ready to deploy.

The growth of the market is such that virtually every GP we speak to today has either executed a CV or is actively considering their first, second, or even third, underscoring the maturation of the market. Europe, in particular, has seen transaction volumes surge over the past 10 years, and we anticipate the final data for 2025, when available, will set a new record in GP-led deals. As the region attracts more secondary specialists and dedicated capital, both large and middle-market opportunities are becoming increasingly competitive, further accelerating the development of a dynamic and well-structured CV ecosystem.

How do GPs go about identifying the “right” asset for a CV?

In my experience, the right asset for a CV is almost always the one a GP is least willing to part with. These tend to be businesses that have materially outperformed initial underwriting, are strategically well positioned, and have a visible path to further value creation, whether through M&A, market expansion, or product evolution.

GPs look for companies where the original thesis still has meaningful runway but where fund life, follow-on capital, or portfolio timing would make a traditional exit suboptimal. Where a GP can articulate a compelling rationale for being the steward of the next phase of growth, and demonstrate that an exit today would sacrifice meaningful upside, the asset is generally a strong fit for a CV.

We recently closed a strong example with the $835 million single-asset CV for Trading Technologies, originally acquired by independent sponsor 7RIDGE. The company embodied all the characteristics that make a CV compelling—durable market leadership, deep sector expertise, and clearly definable catalysts for growth over a three- to five-year horizon. Importantly, 7RIDGE invested a very substantial GP commitment in the CV, signalling conviction and alignment with investors. The transaction was significantly oversubscribed within just two months, underscoring the market’s appetite for high-quality assets and highlighting how thoughtful asset selection drives successful GP-led outcomes.

What does good preparation look like for a sponsor considering a GP-led process?

From our vantage point, the best-prepared CVs don’t begin with a data room; they actually start months earlier. The sponsors who run standout processes take the time to re-underwrite the asset, refresh the investment case, and get specific about where incremental capital will actually unlock value. They build a clear, credible plan for the next three to five years, rather than relying on the momentum of the original thesis.

Just as important is managing the different constituencies. That means engaging LPs early, setting valuation expectations, and giving them genuine choice—not just liquidity, but a clear rationale for why the GP believes the asset deserves a second hold.

As advisers, we often help shape this upfront work—ensuring the governance is tight, the rationale is well articulated, and the process stands up to scrutiny. With more firms entering the secondaries space, it’s increasingly important for sponsors to work with advisers who have genuine, hands-on experience, capable of navigating the complexities of these transactions specifically, within the broader equity capital markets landscape.

When done well, a GP-led transaction has all the hallmarks of a well-run M&A process in terms of clean materials, a disciplined timeline, and a real market check, while still recognising the nuances of a transaction where the GP is both a buyer and a seller—and where, therefore, alignment and transparency matter even more.

What are the biggest misconceptions you see when it comes to CVs?

One of the biggest misconceptions about CVs is that they are a “soft option” reserved for when a traditional exit fails. In reality, single-asset CVs typically target trophy companies: star performers with strong growth prospects that would attract serious sponsor or strategic interest if brought to market. Increasingly, GPs evaluate M&A and CV options side by side, choosing the path that best maximises value, liquidity, and runway for the next phase.

Another misconception is that CVs are a “passing trend.” With unrealized NAV estimated at over $4 trillion, stronger governance, improved alignment structures, and buyers conducting rigorous bottom-up valuation, CVs are now a strategic mainstay. Dedicated capital pools and firms focused exclusively on GP-led deals have cemented CVs’ place in the private equity ecosystem.

Finally, concerns around “self-dealing” persist, but well-run CVs today are heavily diligenced, independently valued, fairness-opined, and designed to create genuine competitive tension. CVs often act as a bridge to a later sponsor sale or IPO, and while CV-on-CV can and does occur, they tend to be executed with long-term value in mind.

It’s worth acknowledging that these myths are steadily eroding as the market evolves. CVs are now widely recognised as a strategic, permanent tool, enabling GPs to back the right asset with the right capital for the right duration.

Do you expect the recent increase in secondary activity to continue?

All signs point to continued strength. The secondary market has grown at an extraordinary pace, with GP-led transactions now representing roughly half of total secondary volume, and the underlying drivers remain firmly in place—record levels of unrealised NAV, LPs seeking liquidity, and GPs with strong assets but constrained fund dynamics.

New specialist funds are actively entering the space, while established buyers are deploying ever-larger pools of capital. As a result, secondary activity—particularly single-asset CVs—is set to remain a key growth area well into 2026 and beyond. Total secondary volume is projected to exceed $225 billion when figures for 2025 are released, up from $160 billion the previous year, with deal activity expected to sustain record levels in 2026, too.

So, what’s The Takeaway?

CVs have emerged as one of the most transformative innovations in private equity over the past decade. They provide a powerful solution where GP conviction, LP liquidity, and buyer demand intersect, enabling sponsors to extend value creation for the market’s highest-quality assets.

As Europe attracts more specialist secondary players and dedicated pools of capital, the opportunities for both GPs and investors are multiplying.