Gottfried: Continuation funds now make up nearly 20% of private equity exits
2025-12-31_12-21 • 4m 27s
Frank Holland (Anchor)
00:00.000
All
right.
So,
according
to
your
reporting,
last
year,
2024,
uh
sales
to
continuation
funds,
they
hit
a
record
13%.
Are
you
seeing
that
same
trend
this
year?
Miriam Gottfried (Reporter)
00:10.400
Yes.
In
fact,
we're
seeing
it
even
more.
We
They
counted
for
19%
of
all
private
private
equity
exits
in
the
first
half
of
2025,
which
is
up
from
7%
in
2022
according
to
Jefferies.
So,
really
they're
on
track
to
be
about
20%
of
exits
for
this
year.
All
Frank Holland (Anchor)
00:27.040
right.
So,
it's
about
20%
of
exits
for
this
year.
It's
obviously
a
big
jump
from
13%,
but
I
want
to
ask
you
about
the
dollar
basis.
That's
the
volume.
What
about
the
dollars?
Are
these
a
lot
of
big
deals
going
into
these
continuation
funds
or
big
sales
where
PE
funds
are
again
Frank Holland (Anchor)
00:39.280
selling
to
themselves?
Miriam Gottfried (Reporter)
00:41.280
So
they
can't
be
they
can't
it's
a
it's
a
dollar
the
dollar
volume
obviously
is
high
overall,
but
each
individual
deal
is
not
that
big
because
they
need
to
raise
specific
funds
dedicated
to
continuation
funds.
So
you
can't
sell
every
asset
to
a
continuation
fund
because
because
Miriam Gottfried (Reporter)
01:00.920
there
needs
to
be
enough
capital
to
basically
buy
up
that
asset.
Okay.
Frank Holland (Anchor)
01:05.480
One
of
the
reasons
we
want
to
talk
to
is
that
we
talk
a
lot
about
that
circular
funding
when
it
comes
to
the
AI
trade
and
the
AI
build
out.
This
seems
very
similar.
Are
you
seeing
clear
parallels
here?
Miriam Gottfried (Reporter)
01:15.120
It's
not
exactly
the
same
because
if
you
think
about
it,
you're
selling
you're
selling
to
the
same
manager,
but
in
a
lot
of
cases
you're
replacing
a
lot
of
the
investors.
So,
you're
taking
the
LPs,
the
limited
partners
in
your
fund
and
you're
going
to
them
and
you're
saying,
Miriam Gottfried (Reporter)
01:29.720
"You
you
guys
want
to
stay
into
this
deal
or
do
you
want
to
sell
out?
And
in
a
lot
of
cases,
LPs
really
want
the
cash
right
now
because
they're
waiting
for
these
private
equity
companies
to
be
sold.
And
so
they're
cashing
out
and
the
investor
base
underneath
the
underlying
Miriam Gottfried (Reporter)
01:44.480
manager
is
being
turned
over.
So
it's
not
exactly
the
same.
The
ownership
is
changing
in
large
part,
but
the
manager
is
staying
the
same
and
you
know
the
carried
interest
that
that
manager
stands
to
receive
could
be
you
know,
resetting
and
and
they
could
be
then
receiving
new
Miriam Gottfried (Reporter)
02:03.400
incentives
on
the
deal.
Frank Holland (Anchor)
02:05.560
Okay.
So,
you
don't
seem
overly
concerned
about
the
idea
of
it
being
circular
funding
or
it
may
possibly
be
creating
a
a
a
structural
issue.
But
I
do
have
to
point
out
um
this
these
continuation
funds,
they
actually
popped
up
right
after
the
great
financial
crisis.
And
that
Frank Holland (Anchor)
02:19.960
seems
to
raise
a
red
flag
I
think
for
a
lot
of
people.
Anything
that's
kind
of
a
parallel
to
that
time,
very
similar
to
the
circular
financing
kind
of
as
a
parallel
back
to
the
.com
bus.
Um,
the
fact
that
they
popped
after
the
great
financial
crisis
and
we're
in
response
to
a
Frank Holland (Anchor)
02:31.960
lack
of
liquidity.
Aren't
there
reasons
that
there's
not
a
lot
of
liquidity
out
there?
I
mean,
the
fact
that
they're
able
to
use
this
to
circumvent,
could
this
be
a
troubling
sign
going
ahead
for
private
equity?
Miriam Gottfried (Reporter)
02:42.280
Well,
it's
a
troubling
sign
because
it
shows
that
they're
not
able
to
take
companies
public
or
sell
them
at
the
valuations
that
they
want
right
now.
And
the
question
is,
when
is
that
damn
going
to
break?
When
are
firms
going
to
be
able
to
start
offloading
some
of
their
assets
at
Miriam Gottfried (Reporter)
02:58.040
the
prices
that
they
want?
And
a
lot
of
these
assets
assets
are,
you
know,
companies
that
were
bought
back
in
2021
during
the
boom
times
for
private
equity
before
the
Federal
Reserve
rapidly
raised
interest
rates.
So,
they
don't
want
to
sell
these
things
off
at
a
loss.
People
Miriam Gottfried (Reporter)
03:13.920
aren't,
you
know,
interested
in
selling
at
below
the
price
that
they
were
dreaming
of.
But,
you
know,
the
reason
that
PE
deals,
as
you
noted
before,
are
slow
is
because
they
they
haven't
been
able
to,
you
know,
find
a
way
to
exit
them.
And
you
know,
a
lot
of
firms
are
saying,
Miriam Gottfried (Reporter)
03:30.760
"This
will
be
the
year.
2026
is
going
to
be
the
year
when
we
can
start
to
sell
some
of
our
assets."
We'll
see
if
that's
the
case.
I
think
that
the
challenge
may
be
that
during
2025,
a
lot
of
people
use
continuation
vehicles,
but
they
were
only
able
to
use
them
to
sell
some
of
Miriam Gottfried (Reporter)
03:47.160
their
best
assets
because
there's
only
a
finite
amount
of
capital
as
I
said
to
buy
to
do
these
continuation
deals.
And
so
they,
you
know,
we're
able
to,
um,
you
know,
to
do
it
with
their
best
assets,
but
can
they
do
it
with
their
B-grade
assets?
Frank Holland (Anchor)
04:02.240
Can
they
do
it
with
the
next
level?
find
out
in
2026
because
you
said
it's
now
20%
jumping
from
2024
13%
now
expected
to
be
20%.
So
I
think
we're
going
to
find
out.
I
think
we're
going
to
Miriam Gottfried (Reporter)
04:12.000
find
out.
We
are.
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