IPOs continue to account for only a small share of private equity exits. With traditional exit routes constrained, secondary transactions — particularly GP-led continuation vehicles — have become the dominant liquidity mechanism in 2025 and are expected to remain so into 2026 and beyond.
At the same time, LPs are stretched. By the end of 2025, 53% of LPs indicated they are limited in making new commitments because past commitments have yet to be drawn down — an increase of 15 percentage points from year-end 2024. That means when a GP presents a continuation vehicle, the "roll or sell" decision carries real portfolio-level consequences.
The problem? Most continuation vehicle processes are run on the GP's terms, with the GP's data, on the GP's timeline. The information asymmetry is significant — and it's exactly the kind of environment where independent primary research changes the outcome of the decision.
This guide is for anyone evaluating assets inside a GP-led secondary or continuation vehicle — whether you're an LP deciding whether to roll over, a secondary buyer underwriting the deal, an advisory team running diligence, or a PE deal team structuring the vehicle itself. The focus is practical: how to independently validate portfolio company performance when the seller and the buyer's sponsor are the same entity.
What Makes Continuation Vehicle Diligence Different
A continuation vehicle (CV) is a transaction where a GP transfers one or more portfolio companies from an existing fund into a new vehicle, often with fresh capital from secondary buyers. Existing LPs are given the option to roll their interest into the new vehicle or cash out at a stated valuation.
This creates a structural conflict of interest that doesn't exist in a typical M&A process:
- The GP is on both sides of the table. They're selling from one fund and buying into the new vehicle. Their economics (carry, management fees) reset or extend.
- The valuation is GP-influenced. While a fairness opinion is typically obtained, the GP controls the narrative, the data room, and often the selection of the adviser.
- The information package is curated. LPs and secondary buyers receive materials the GP has prepared — financial models, management presentations, and customer references the GP has hand-picked.
- The timeline is compressed. LPs often have 20–30 days to make a roll-or-sell decision, and secondary buyers may have only slightly more time to underwrite.
None of this means continuation vehicles are bad deals. Many are genuinely good assets that deserve more runway. But it does mean that the standard diligence playbook — relying primarily on GP-provided materials — is insufficient. You need independent validation.
The Five Pillars of Independent Diligence on Continuation Vehicle Assets
Whether you're evaluating a single-asset CV or a multi-asset vehicle, the diligence framework should cover five areas — each of which benefits from primary research that goes beyond the data room.
1. Revenue Quality and Customer Durability
The GP will present topline growth and a roster of logo customers. Your job is to pressure-test what's behind those numbers.
What to validate independently:
- Customer satisfaction and retention drivers. Are customers staying because the product is genuinely embedded in their workflow, or because switching costs are high and they're actively evaluating alternatives?
- Net revenue retention reality. The GP's NRR figure may be accurate on a blended basis but mask churn in specific cohorts or segments. Talking to customers directly — especially those who've been on the platform for 2+ years — reveals whether expansion revenue is organic or driven by price increases.
- Concentration risk beyond the top 10. GPs will disclose top-customer concentration. What they won't always highlight is revenue dependency on a single use case, a single buyer persona within enterprise accounts, or a single contract renewal cycle.
How to do it: Commission independent customer interviews — not with the GP's reference list, but with customers identified through your own sourcing. Former customers (churned accounts) are equally valuable. A structured B2B survey of 15–25 customers across segments will surface patterns that a GP's hand-picked references never will.
2. Competitive Positioning and Market Trajectory
Continuation vehicles are predicated on the thesis that the asset has significant remaining upside. That thesis depends on the competitive landscape staying favourable — or improving.
What to validate independently:
- Competitor momentum. Has a competitor raised significant capital, launched a competing product, or started winning deals the portfolio company used to win? The GP's management team won't volunteer this.
- Market growth assumptions. GPs often cite TAM figures from industry reports. Primary research with channel partners, industry buyers, and adjacent competitors can validate whether the addressable market is actually expanding at the rate the model assumes.
- Pricing power sustainability. If the value creation plan for the next hold period involves price increases, you need to know whether the market will bear it. Customers and competitors are the only reliable source for this.
How to do it: Channel checks with competitors, resellers, system integrators, and industry buyers who evaluate solutions in the category. Former executives at competing firms can provide candid perspective on where the portfolio company is genuinely differentiated — and where it's vulnerable.
3. Value Creation Plan Feasibility
Every CV comes with a forward-looking value creation plan. Typically it involves some combination of organic growth acceleration, margin expansion, tuck-in M&A, and international expansion. Your job is to assess which of these levers are realistic.
What to validate independently:
- Operational improvement claims. If the GP says there's margin expansion opportunity through operational improvements, talk to former executives and senior operators who've been inside the business. They'll tell you whether the cost structure has already been optimised or whether there's genuine room to run.
- Go-to-market scalability. If the plan involves geographic expansion or moving upmarket, primary research with prospective customers in those segments will reveal whether demand actually exists at the assumed price points.
- M&A pipeline reality. If tuck-in acquisitions are part of the thesis, channel checks can validate whether attractive targets exist, whether they're actually available, and whether integration risk is manageable.
How to do it: Structured interviews with former C-suite and VP-level executives who left the company in the last 12–24 months. These individuals have the operational context to assess whether the value creation plan is grounded in reality. Supplement with prospective customer interviews in target expansion segments.
4. Management Team Assessment
In a continuation vehicle, the management team is typically staying. That's part of the thesis. But "staying" and "capable of executing the next phase of growth" are not the same thing.
What to validate independently:
- Execution track record (beyond the GP's narrative). Has the team actually delivered on prior commitments, or has the GP been compensating for management gaps with operating partners and consultants?
- Bench strength. Is the next layer of leadership capable of scaling the business, or is the company over-dependent on two or three individuals?
- Cultural and organisational health. Former employees — particularly those in middle management — can reveal whether the organisation is genuinely high-performing or whether turnover, morale issues, or misaligned incentives are being papered over.
How to do it: Backchannel references with former direct reports, peers, and board observers. This is primary research that the GP will never provide — and it's often the single most valuable diligence workstream for assessing execution risk over the next 3–5 year hold.
5. Valuation Benchmarking and Entry Price Reasonableness
The stated valuation in a CV is not a market-clearing price in the traditional sense. It's been negotiated between the GP and the lead secondary buyer, with a fairness opinion layered on top. You need independent inputs to assess whether the entry price is reasonable.
What to validate independently:
- Comparable transaction multiples. Not just public comps — but recent private transactions in the same sub-sector. Primary research with investment bankers, advisers, and other GPs active in the space can surface relevant private deal data.
- Forward revenue and EBITDA achievability. The multiple only matters if the denominators are real. Your independent customer and competitor research feeds directly into whether the forward projections underpinning the valuation are credible.
- Discount to NAV context. If you're an LP being offered a cash-out option, the discount to NAV matters — but only if the NAV itself is defensible. Primary research on the underlying business is the only way to form an independent view.
A Practical Diligence Workflow for Continuation Vehicles
Given the compressed timelines of most CV processes, here's a realistic workflow for building independent conviction:
| Week | Activity | Output |
|---|---|---|
| Week 1 | Review GP data room; identify key claims to validate; brief primary research provider on scope | Research brief with 5–8 specific hypotheses to test |
| Week 2 | Independent customer interviews (10–15); competitor channel checks (5–8); former executive interviews (3–5) | Interview summaries, pattern analysis, and initial findings |
| Week 3 | Synthesise primary research against GP claims; flag discrepancies; assess value creation plan feasibility | Independent diligence memo with go/no-go recommendation framework |
| Week 4 | Final decision meeting; negotiate terms if rolling; document key risks and monitoring triggers | Investment committee memo or LP advisory committee input |
This timeline is tight but achievable — if you're working with a research partner who can mobilise quickly and doesn't require you to schedule every call yourself.
Red Flags That Primary Research Surfaces in CV Diligence
Across dozens of CV-related research projects, certain patterns recur. Watch for these:
- Customer references that are too polished. If every reference the GP provides sounds like a testimonial, it's because they've been coached or cherry-picked. Independent interviews with non-reference customers almost always reveal a more nuanced picture.
- Revenue growth driven by a single catalyst that's fading. COVID-era tailwinds, a one-time regulatory driver, or a competitor's stumble. If the growth story relies on a non-recurring catalyst, the forward projections are at risk.
- Former executives who are diplomatic but not enthusiastic. When a former CRO or VP of Product says "the company has a solid foundation" instead of "I'd invest my own money," pay attention to the gap between the words and the energy.
- Competitors who aren't worried. If competitors describe the portfolio company as "fine but not top-tier" or "we don't lose to them much anymore," the competitive moat may be thinner than the GP's materials suggest.
- Customers who can name alternatives. Strong market positioning means customers can't easily articulate who they'd switch to. If your interviewees rattle off three alternatives without hesitation, switching risk is higher than the GP's churn metrics imply.
Why This Matters Now
The volume of continuation vehicle transactions is increasing precisely because traditional exits are constrained. That means more investors — LPs, secondary funds, advisory teams, and deal teams — are being asked to underwrite these structures with less time and more information asymmetry than a standard buyout.
The investors who navigate this well will be the ones who build independent conviction through primary research: talking to real customers, real competitors, and real former operators — not just reading the GP's slide deck.
The ones who don't will find out what they missed when the next hold period is already underway and the exit window is closed.
How Woozle Supports Continuation Vehicle Diligence
Woozle Research runs end-to-end primary research for investment teams evaluating assets in GP-led secondaries and continuation vehicles. We don't sell you a list of experts and wish you luck — we take your research brief, go into the field, and come back with finished, actionable findings.
For CV diligence specifically, that means:
- Independent customer interviews sourced outside the GP's reference list — including churned customers and prospects who evaluated but didn't buy
- Competitor and channel checks to validate market positioning, pricing power, and competitive trajectory
- Former executive interviews to pressure-test value creation assumptions and management capability
- Delivered as finished research outputs — synthesised, structured, and ready for your investment memo — not raw transcripts you have to process yourself
If you're evaluating a continuation vehicle and need independent validation of what's in the data room, talk to our team. We can mobilise within days and deliver within your decision timeline.
