Continuation Vehicle Terms Remain Stable After Record Year For Global Secondaries Transactions, Morgan Lewis 2026 Study Reveals

LONDON/NEW YORK, 5 May 2026: Continuation vehicles are a permanent and evolving feature of the private markets landscape, according to findings from Morgan Lewis’s Annual Continuation Vehicles Report 2026, which offers a comprehensive analysis of how continuation vehicles (CVs) are being structured and executed.

Morgan Lewis has one of the largest and most sophisticated global secondaries practices, with over 100 lawyers regularly advising sponsors, secondary buyers, and investors on the full spectrum of private fund transactions worldwide. This report draws on a combination of data gathered from a broad review of legal terms across 169 CVs over a five-year period (Q1 2021–Q1 2026) and the secondaries market experience of Morgan Lewis attorneys.

It charts the rise of CVs from three interrelated perspectives: the sponsor, the lead investor, and the existing investor, and aims to provide a more grounded and practical framework for understanding continuation vehicles and how they function in today’s market.

Overview of the current landscape:

• 97% of CVs charge a management fee of 1% or less
• 49% of CVs have a stepdown of management fees on an extension to the initial term
• 79% of CVs include a tiered carry with 60% adopting both internal rate of return (IRR) and multiple on invested capital (MoIC) return thresholds
• 74% of CVs have a five-year initial term with 92% of CVs providing for up to two years of term extensions
• 64% of CVs include key person provisions

Ted Craig, Partner at Morgan Lewis in London, commented: “2025 was a record year for global secondaries transactions, with CVs estimated to represent at least a fifth of private market distributions in 2026. Drawing on our own deal data and deal experience, our findings signal a mature, growth-oriented market, revealing how sponsors are using CVs strategically to not only provide much-needed liquidity, but to fuel value creation.”

Joe Zargari, Partner at Morgan Lewis in New York, added: “In the past, CVs were typically reserved for use in end-of-life situations and, while that is still common, our report reveals how they are also fast becoming mainstream tools to provide liquidity during a fund's life with the goal of reconciling sponsor, secondary buyer, and existing LP objectives. With competition for lead investor positions intensifying, we’re also seeing a shift to co-lead structures becoming more common, with a focus on sponsor alignment and rollover, minimum capacity rights, and resetting of economics, as well as governance protections.”

Tayne Rankine, Partner at Morgan Lewis in London, concluded: “Our report indicates that while market practice has generally converged, there remain significant elements of variability reflecting the bespoke nature of every transaction. For existing investors, LP expectations increasingly focus on transparency, conflict mitigation, and balanced election mechanics. As this market continues to develop, it’s clear CVs must be defensible, executable, and sustainable to withstand LP, regulatory, and market scrutiny.”

About the Annual Continuation Vehicles Report 2026

The report analysed 169 CVs ranging in size from $150 million to $4.67 billion that the Morgan Lewis team advised between Q1 2021 to Q1 2026.

It draws on a combination of data gathered from a broad review of CV legal terms and secondaries market experience of Morgan Lewis attorneys.

Morgan Lewis’s sophisticated global secondaries team advises sponsors, secondary buyers, and investors on the full spectrum of private fund transactions worldwide.