Private equity firms sold companies to themselves at an unprecedented rate this year, using a controversial tactic to hold on to assets as managers struggled to find buyers or list their investments.
First reported in the Financial Times, roughly a fifth of all private equity (PE) sales in 2025 involved groups raising money from new investors to acquire businesses from their older funds.
This was up from 12 to 13 per cent the prior year, according to Sinha Haldea, global head of private capital advisory at Raymond James.
These transactions sell assets already owned by a PE group to so-called continuation vehicles, which are newer funds also managed by the firm.
The tactic allows PE firms to return cash to investors in older funds, but has also prompted concerns around potential conflicts of interest.
Haldea noted this year is set “to break all records”, predicting the final figures for the year to show $107bn (£79.2bn) in such sales, up from $70bn in 2024.
Valuation struggle
The use of this tactic has surged in recent years as buyout firms have struggled to secure the valuations they want from either external buyers or public markets, choosing instead to hold on to investments, in hopes of getting higher offers in the future.
European private equity house PAI Partners sold part of its stake in ice cream group Froneri, which owns the popular Haagen-Dazs brand, to a continuation vehicle for the second time, in a deal valuing the company at £13bn.
Others firms including Vista Equity Partners, New Mountain Capital and Inflexion also used multi-billion dollar continuation funds to sell down some of their larger investments.
Haldea added such transactions had become a “popular and effective win-win-win liquidity solution in a stressed exit environment” due to exit values “still recovering from 2024 lows”.
The structure is also attractive to firms because the deals generate extra management fees and potentially lucrative future performance fees from companies in ageing funds.
Backers concerns
Despite PE firms use of the methods, some backers of funds, including pension funds, are concerned that in these transactions the same buyout firm in on both sides of the deal as the buyer and the seller.
Investors fear firms could downplay the value of assets being transferred, creating a disadvantage for original fund backers being offered an exit.
PE managers however argue they offer their original backers the chance to roll their stakes into the new fund and that new investors help set the price at which assets are transferred.
But investors which are used to backing funds on the strength and reputation of its managers rather than analysing assets may lack the skills or capacity to assess companies, potentially putting them at a loss.