GP-led continuation vehicles have moved from a niche liquidity tool to a mainstream exit route. For many sponsors, a continuation fund is now considered alongside a sale or IPO for their best assets, not as a fallback.

That makes them an M&A transaction in all but name, and they should be advised on as one.

Here are five questions we ask at the start of every GP-led process.

1. Is the price tested? Investors and their advisers increasingly expect a robust price discovery process, typically through a competitive process led by an adviser and, often, a fairness opinion. A price that cannot be defended will become the focus of every subsequent conversation.

2. What happens to management? A continuation fund often coincides with a reset of management incentives. That needs the same care as a secondary buyout: rollover terms, new sweet equity and leaver provisions all need to be agreed.

3. How are conflicts handled? The sponsor is on both sides. The fund documents, the advisory committee process and the information given to existing investors must show that conflicts were identified and managed.

4. Does the asset need regulatory approvals? A change in the fund holding the asset can trigger merger control, foreign investment or sector-specific approvals. These are frequently overlooked because "nothing is really changing".

5. What does the exit look like? A continuation fund buys time, not certainty. The new vehicle's term, its extension options and the expected route to exit should be clear from day one.

A note on the buyer's side. Secondary investors leading continuation vehicles have become more demanding. They expect detailed diligence, a clear alignment of the sponsor's interests (often through a meaningful rollover of carried interest and a fresh commitment), and governance rights that look more like a co-investment than a passive fund interest. Sponsors who prepare for that level of scrutiny run faster processes.

Treat the documents as a deal set. The transfer agreement, the new fund's limited partnership agreement, the management arrangements and any financing at the asset level all need to tell the same story. When they are negotiated by separate teams in separate timetables, inconsistencies creep in.

We expect GP-led activity to keep growing. The sponsors that run them well treat them like any other significant transaction: with an integrated team covering funds, M&A, tax and regulatory issues from the outset.

To discuss a GP-led transaction, contact Rafael Mendes in New York.