Episode summary
Inside the $100B Continuation Vehicle Boom
How I Invest With David Weisburd
· · Hosts: David Weisburd · Guests: Michael Woolhouse
Summary
Single asset continuation vehicles are presented as a private equity structure built around the companies sponsors already know best. Michael Woolhouse argues that the core appeal is simple: a sponsor has often already made four or five times the money, but instead of selling because of fund life, DPI pressure, or liquidity needs, it can roll the best asset into a new vehicle and keep compounding upside.
Woolhouse says the right way to underwrite these deals is like a buyout, not like a broad secondary portfolio trade. The investor should diligence the company bottoms up, assess the sponsor and the economics, and make sure the seller really could exit today if it wanted to. That framing, he argues, is what separates attractive continuation vehicles from weaker situations where a sponsor is trying to solve a problem rather than choose liquidity from strength.
He also says the structure is highly aligned: sponsors often roll 100% of proceeds, commit roughly 8% to 10% of the vehicle, and accept lower management fees and tiered carry. On his read, the market is still young but attractive, with single asset CVs growing from about $30B in 2024 to more than $50B in 2025, while industry data is beginning to show returns as high as buyouts with lower loss ratios.
Woolhouse closes on culture and process: stay in the fairway, act quickly, learn from mistakes, and train junior investors by putting them in the room. For him, the best firms combine entrepreneurial energy with enough discipline to keep chasing only the deals where they have a real right to win.
Key takeaways
- Woolhouse says continuation vehicles work best when the sponsor could sell today but chooses to keep the asset for another four to five years.
- He argues the right underwriting lens is private-equity style diligence on the individual company, not a portfolio-level secondary approach.
- Woolhouse says GP alignment is unusually strong because sponsors often roll all proceeds and commit about 8% to 10% of the CV capital.
- He says typical CV economics are lower-fee, tiered-carry structures with targets around 2x net and 20% IRR net or better.
- Woolhouse says the market is growing fast, citing about $30B in 2024 and more than $50B in 2025 for single asset CVs.
- He argues the main discipline is staying in the fairway and avoiding fringe deals that do not fit the firm’s right to win.
Notable quotes
“we want to make sure that they could sell the business today if they could”
“You can't use that average concept in putting six seven 800 million dollars into a into a single company”
“we call our partners our sponsor partners”
“the general partner is a seller on one hand out of the older fund and a buyer or investor into the continuation vehicle on the other hand”
How the episode opens
So today at TBG, you focus on a very specific part of the secondary market. Tell me about that.
Every sponsor at some point in their history has owned a great business. They've made four or five times the money. Um, and they sold it to one of their competitors because they needed to get cash back.
Their investors were looking for DPI. The management team uh was giving them some pressure to say, "We've done what we said we would do. You've made we could make five times the money.
It's time to reset. Or you're at the end of the life of a fund. the fund is out of, you know, work that houses the company is out of time, is out of money.
All these are different pressures to sell. Historically, um, the sponsor would simply say, "Thank you very much. We've made five times the money and I'm going to sell the business to one of my competitors.
Notwithstanding, I see a lot of upside. Their competitor would then go on to make four times the money and so on and so on. And I would go to the sponsor and say, "Do you remember that company?
And they'd go, "Oh, of course I remember that company. There was so much runway left, but we had to sell."
How do you know that you're not being adversely selected? In other words, how do you know that the GP is not just taking a free option?
But what's critical about this business is to approach it with sector expertise, to approach it like a private equity business, a private equity investor would do. And to that end, the core judgment, if I were to distill things down for us, is um at the point of entry, at the time that we're facilitating a liquidity option for the existing investors and buying in to the continuation vehicle, we want to make sure that they could sell the business today if they could.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- continuation vehicles
- private equity secondaries
- gp lp incentives
- adverse selection
- single-asset cv market growth
Companies and tickers mentioned
- TPG Capital
- Canada Pension Plan Investment Board
- AlphaSense
Watch the episode
Watch “Inside the $100B Continuation Vehicle Boom” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
