Continuation fund

Worked example

A worked example of how the GP's carry resets (illustrative figures):

1. The old fund bought an asset for $40 million; it's now worth $200 million. Moving it into a continuation vehicle at that $200 million valuation crystallizes the GP's carried interest on the $160 million of gains earned inside the old fund — the GP gets paid on that gain now, at the transaction.
2. The continuation vehicle then starts its own carry calculation from a fresh $200 million cost basis. If the asset later grows to $300 million, the GP earns carry on the new $100 million of gains created inside the continuation vehicle — a second bite, on top of the one already taken at rollover.
3. For rolling LPs, this means their reset cost basis is $200 million, not $40 million — they don't owe carry twice on the same dollar of gain, but they also don't recapture any further upside on the value already crystallized.
4. Because the GP earns fees and carry on both the old fund's crystallization and the new vehicle going forward, an independent fairness opinion and a real cash-out option for LPs who don't want to roll are now standard safeguards against this structural conflict.