https://www.nytimes.com/2025/12/24/business/private-equity-continuation-funds.html
Investors Warn of ‘Rot in Private Equity’ as Funds Strike Circular Deals
Buyout firms have struggled to sell companies they own and have instead found a workaround to get cash back to clients: Selling the companies to themselves. Investors Warn of ‘Rot in Private Equity’ as Funds Strike Circular Deals
Buyout firms have struggled to sell companies they own and have instead found a workaround to get cash back to clients: Selling the companies to themselves.
By Maureen Farrell, The New York Times, Dec. 24, 2025
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Continuation funds are meant as a temporary fix for a serious problem that has been bedeviling firms like Clearlake.
Private equity firms have been struggling to deliver on their core business model of taking on debt, buying companies and selling them for a profit. Several years of high interest rates have made it too expensive for many would-be buyers to purchase companies with debt, and private equity firms are contending with a backlog of more than 31,000 unsold companies, a record amount. Deal activity picked up toward the end of this year, but not enough to make a significant dent in the backlog.
Continuation vehicles are providing a short-term solution by allowing firms to sell the companies to themselves, book a paper gain and wait for interest rates to improve.
Private equity firms have been turning to this strategy more frequently. The dollar value of continuation vehicles across the industry is expected to total $100 billion or more by the end of 2025…
Some firms are pushing out the sales timeline even further. This year, private equity firms including Accel-KKR have started selling their companies from one continuation vehicle to another.
The industry calls these new funds “CV-squared.” [end quote]
Are you surprised that zombie companies and bankrupt companies are most likely to end up in “continuation vehicles” with outsized reports of their true value?
This is the modern version of a Ponzi scheme. Anyone who sinks real capital into any of these private equity firms is asking to be squeezed by these schemes.
Wendy