Single-asset continuation funds, which allow firms to extend their hold by moving a single portfolio company into a new vehicle backed by secondary investors, are back in the news again—both good and bad—after a slower 2023.

On the positive end of the spectrum, single-asset transactions have surpassed multi-asset as more middle market sponsors strategically employ them on favored assets (vs. the more common multi-asset portfolio management usage among large-cap sponsors), according to market data from Evercore.
Broadly, GP-led secondary transaction volume through the first half of 2024 is nearly double that of the prior year, and Vista Equity Partners, Clearlake Capital Group, and Advent International are all currently planning new launches.
Per Secondaries Investor, Advent International is working with Evercore on a process for Xplor Technologies, the software and payments company formed from the merger of Clearent and Transaction Services Group in 2021.
Vista is reportedly also working with Evercore on a possible continuation fund for the creatively-named Cloud Software Group, the combination of its Citrix Systems take-private and TIBCO Software.
The deal, which closed in 2022 for $16.5 billion (plus the $4.3 billion TIBCO acquisition in 2014), is one of Vista's largest ever and would be the firm’s first continuation fund. Its size may make for a more challenging raise, and it’s expected that Vista will elect to move only a portion of its stake into the continuation vehicle—potentially around $2 billion.
Similarly, Clearlake is said to be evaluating a single-asset continuation fund for Constant Contact (Evercore is advising here as well), the email marketing platform it acquired alongside Siris Capital in 2021, which sold its 50 percent stake in February.
Clearlake has been among the most active users of the strategy, with its five "Icon Partners" continuation funds launched in 2021 for a handful of its portfolio companies.
Funds I (software services provider Ivanti) and II (data integrity platform Precisely) have had positive outcomes, but performance in the remaining lineup has been somewhat muted: Icon IV and V were marked at a TVPI of 1.0x and 1.2x, respectively, as of December.
That brings us to the less positive single-asset CV news this week: Clearlake's Wheel Pros, held in Icon Partners III, filed for Chapter 11 on Tuesday. There haven't been many continuation fund bankruptcies to date, so it’s a notable development for the relatively new structure.
One of Icon III's lead investors is ICG, which said earlier this week that it’s now planning to slow its pace of deployment into new single-asset deals. The Wheel Pros outcome was not the reason given, but rather what chief investment officer and CEO Benoît Durteste says is a "huge supply/demand imbalance, particularly for larger sized transactions where we're actually having to put the brakes on deployment."
Despite seemingly isolated hiccups like Wheel Pros, the earliest data available on continuation fund performance is positive. Paris' HEC School of Management released a study in March showing that 2019 - 2023 vintage continuation funds recorded an average TVPI of 1.49x, largely in line with the 1.51x benchmark of traditional buyout.
Notably, the returns dispersion on continuation funds was lower than that of buyout.
The subset of single-asset continuation funds also performed slightly better than multi-asset, which, the study notes, would be expected based on the higher risk premium from concentration.
Continuation funds have, however, trended toward lower management fee rates—typically around one percent of invested capital—than traditional blind pool funds. With HEC's findings based on performance net of fees, it’s possible that there is actually a slightly wider gap in underlying performance.