The “trophy asset” label traditionally assigned to businesses being moved into continuation vehicles (CVs) is fading as deal volumes reach record levels.

Where once sponsors sought to extend ownership only of top-performing companies, while offering LPs a liquidity route, massive CV uptake means incoming investors must be more discerning of what they choose to back.

“Market activity continues to accelerate to record highs but it’s now a much broader set of varying quality companies and diverging deal motivations,” Christophe Browne, a partner at Lexington Partners, said at the recent Mergermarket Private Equity Forum US 2026, noting that CVs were once described as only for the “greatest hits” of private equity.

“You better have the experience, the pattern recognition and the skillset to sift through all of that and to identify the best investment opportunities.”

Ongoing evolution

This comes amid as the GP-led secondaries market sees rapid growth. Evercore claims GP-led volume reached USD 65bn in 1H26, up 35% year-on-year, as reported, with single-asset CVs making up the bulk of deal flow.

“There’s been an evolution along with the significant growth you’ve seen, not only in total transaction volume, but in the number of sponsors, particularly in the middle market,” said Dan Wieder, a managing director on H.I.G. Capital’s GP solutions team. He noted that providing liquidity to investors and positioning top-performing companies for future success remain key drivers for sponsors.

Rising CV usage is also partly a function of delayed exits. According to Mergermarket data, the global average hold period on exit reached 6.4 years in 3Q26, up from an average 4.4 years between 2010-2020.

While private equity inventory continues to grow, liquidity levels have remained flat for around the last decade. The GP-led secondaries market is evolving to address this challenge.

“It’s the symptom of the problem and it’s going to be frankly the tip of the iceberg in terms of how private markets get executed upon and how folks move in and out of companies,” Andrew DiGeronimo, a managing director and co-head of partnership solutions at Warburg Pincus, said at the forum.

In this context, one of the issues facing LPs is where to place single-asset CVs within their allocation buckets as the opportunity set continues to grow.

“The fact that it’s called a secondary is a misnomer in many ways,” said Christiaan van der Kam, head of secondaries private equity at Schroders Capital. “I think it’s just a totally new asset class within private equity.”

The rise of so-called CV-squared transactions – assets moving from one CV to another – presents a further flashpoint in the market’s evolution. Notable examples include a EUR 3.6bn (USD 4bn) transaction last year involving PAI Partners-owned ice cream maker Froneri.

While such deals can pose a perception issue, van der Kam argued that investors should approach them as they would any other CV investment. The key questions include whether the GP remains the most appropriate owner of the asset and whether the value creation plan makes sense.

Jim Pittman, former head of private equity at British Columbia Investment Management Corporation (BCI), observed that LPs evaluating potential CV-squared transactions should start with a simple premise: Is the asset genuinely high quality, or is it being transferred into another CV because it can’t be sold?

“The first question is always: Is this just BS?” he said.

Focus on process

More broadly, LP attitudes towards CVs are also evolving. Whereas previously, much of the debate centered around the legitimacy of these transactions, now structural integrity and alignment – covering transparency, governance, and process – are to the fore.

However, numerous practical challenges remain. Rather than simply allocating capital to funds, LPs are increasingly being asked to evaluate individual assets and make fresh underwriting decisions within relatively narrow timeframes, despite often lacking the resources to do so.

This operational burden, as much as concerns over valuation discounts, has been a key source of LP frustration.

At the same time, a reluctance to evolve, manifested in characteristic analysis paralysis, could see leave many investors risk getting stuck behind the curve.

“Many of them are writing white papers,” Pittman said of some LPs still grappling with CVs. “My answer is, by the time you finish writing the white paper, you’ll probably miss the opportunity.”