Template
Continuation Vehicle Due Diligence Questions
A structured question set for LPs deciding to roll, sell, or commit new money in a continuation vehicle.
What this template is for
GP-led continuation vehicles compress a complex decision into a short window. Existing LPs must decide whether to roll, sell, or make a partial election, while new investors must underwrite the asset or assets at a fresh price with a new fee, carry, and governance structure. This template provides the questions LPs should answer before making an election or committing new money.
When LP teams use it
- GP-led single-asset continuation vehicle
- GP-led multi-asset continuation vehicle
- Strip sale or tender offer
- Continuation vehicle with new-money follow-on capital
- Continuation vehicle involving a fund nearing end of term
- Post-decision review of a CV transaction
- IC preparation for a roll, sell, partial sale, or new-money decision
The template
Transaction overview
- GP name and original fund
- Continuation vehicle name
- Single-asset, multi-asset, or strip transaction
- Asset or assets included
- Existing LP election options: roll / sell / partial roll / partial sale
- New-money opportunity offered
- Election deadline and expected closing date
- Lead buyer or syndicate composition
- Financial advisor, legal counsel, fairness opinion provider
- LPAC involvement
- Recommended status: roll / sell / partial / commit new money / decline new money / defer
Why this transaction exists
- Why the GP is pursuing a CV instead of a sale, IPO, recap, or hold inside the existing fund
- Is the original fund near the end of term
- Is the GP seeking more time for value creation
- Is the GP solving a liquidity need for existing LPs
- Is the GP solving a fundraising, DPI, or track record issue
- Is the GP raising additional capital for the asset
- Is the transaction driven by one asset, several assets, or fund-level pressure
- What alternatives the GP evaluated
- What would happen if the CV transaction did not close
- Does the rationale benefit existing LPs, the GP, new investors, or all parties
Transaction structure
- Single-asset, multi-asset, or strip
- Existing LPs: roll, sell, or partial elections
- Minimum and maximum rollover amount
- New-money pricing and terms
- Lead buyer or syndicate composition
- Secondary buyer identity and reputation
- New investor rights
- Governance structure of the CV
- Expected ownership after transaction
- Use of proceeds
- Follow-on capital needs
- Debt financing or refinancing involved
- Management and GP rollover
- Treatment of existing fund reserves
- Treatment of unfunded commitments
- Any stapled primary commitment or related fundraising arrangement
- Any related-party transaction or affiliate involvement
Fairness, process, and conflicts
- Fairness opinion provider and scope
- Was a third-party valuation obtained
- Auction, limited auction, or bilateral process
- Number and type of bidders contacted
- Number of bids received
- Was there a market check
- Why the lead buyer was selected
- LPAC involvement and recommendation
- Were conflicts disclosed clearly
- Did the GP disclose its economic incentives
- Was the election timeline reasonable
- Were LPs given enough information to evaluate the transaction
- Was the process designed to maximize price, provide liquidity, retain upside, or balance all three
- Did the GP or advisor create any pressure to roll
- Are selling LPs and rolling LPs treated fairly
- Are new-money investors receiving rights that rolling LPs do not receive
Fees, carry, and economics reset
- Management fee in the CV and basis
- Carry rate, preferred return, and catch-up
- GP carry crystallization at transaction close
- Amount of crystallized carry
- GP rollover of crystallized carry
- GP cash-out amount, if any
- New GP commitment
- Fee holiday or reduced-fee period
- Transaction expenses paid by existing LPs, rolling LPs, new LPs, or the asset
- Treatment of broken-deal expenses
- Comparison to economics in the original fund
- Does the fee/carry reset fairly reflect remaining work and risk
- What economics the GP earns if the asset merely reaches the base case
Asset-level diligence
- Asset performance since original investment
- Original investment thesis
- Current business plan and updated value-creation thesis
- Historical revenue, EBITDA, cash flow, or operating performance
- Performance vs. original underwriting case
- Key drivers of value creation to date
- Remaining value creation plan
- Management team quality and alignment
- Customer, tenant, borrower, or counterparty concentration
- Capex or follow-on capital requirements
- Debt and capital structure; covenants and maturity schedule
- Recent trading, operating, or valuation trends
- Reason for not exiting via traditional sale, IPO, or recapitalization
- Comparable transaction support for pricing
- Third-party diligence materials reviewed
- What has to be true for the asset to generate the target return from today's price
Pricing and valuation
- Transaction valuation
- Entry multiple or valuation basis
- Price vs. last reported NAV and prior internal marks
- Discount or premium to NAV
- Comparable company and transaction support
- DCF, exit multiple, growth, margin, and debt paydown assumptions
- Sensitivity to exit multiple, growth, rates, and margin
- Valuation advisor opinion, if any
- Price discovery quality
- Does the price compensate rolling LPs for the risk of staying in
- Does the price compensate new-money investors for underwriting at today's value
Alignment
- GP commitment and rollover into CV
- GP cash-out vs. rollover
- Carry crystallization vs. rollover
- Management rollover and reinvestment
- Lead buyer alignment
- Other LP elections, if known
- Signal from sophisticated LPs
- Is the GP's upside aligned with rolling LPs
- Is the GP's downside meaningful
- Does the GP have enough capital at risk after closing
- Do new investors have better rights or economics than rolling LPs
- Do selling LPs influence the process in a way that disadvantages rolling LPs
Roll decision framework
- Do we have enough information to underwrite the asset at the CV price
- Is the asset still consistent with our original reason for investing
- Do we believe the remaining value creation plan
- Are we comfortable with the new fee and carry structure
- Are we comfortable with the governance rights
- Are we comfortable with the expected hold period
- What is the opportunity cost of rolling
- What portfolio concentration does rolling create
- What liquidity are we giving up by rolling
- What would make us regret rolling
- If this were offered as a new deal today, would we invest
Sell decision framework
- Are we comfortable with the price discovery
- Does selling lock in an acceptable return
- Does selling improve liquidity, pacing, or concentration
- Are we selling because of asset, GP, portfolio, or process concerns
- What upside are we giving up
- What downside are we avoiding
- Could a sale harm the GP relationship
- Would we sell a partial amount instead of the full position
- How does the sale compare to other liquidity options
- What would make us regret selling
New-money decision framework
- Are we underwriting this as a new investment rather than a relationship accommodation
- What is the alternative use of capital
- Is the expected return attractive from today's price
- Are we receiving appropriate economics and rights
- Are we comfortable with information quality
- Are we comfortable with sponsor alignment
- Does the asset fit our current portfolio
- Does the transaction increase concentration with the GP, sector, vintage, or asset
- Would we commit if we were not already an LP in the GP's fund
- What conditions would need to be met before committing new money
Liquidity, tax, and portfolio implications
- Liquidity impact of rolling vs. selling
- Pacing and vintage-year exposure impact
- GP, sector, and asset concentration impact
- Remaining hold period
- Expected distribution timing
- Tax consequences of sale or rollover
- UBTI, ECI, withholding, or blocker considerations
- K-1 or reporting implications
- ERISA or policy considerations, if applicable
- Accounting or valuation implications
- Does the transaction create any policy or mandate issue
Legal and governance terms
- CV LPA and election documents reviewed
- Side letter available
- Information, reporting, LPAC, consent, and removal rights
- Key-person provisions
- Transfer, exit, MFN, and co-investment rights
- Confidentiality provisions
- Most important legal differences vs. original fund
- Open legal issues before election
- Counsel and tax reviewer
Timeline and process discipline
- Date materials received and data room opened
- Election deadline and IC date
- Legal and tax review deadlines
- Sponsor, management, advisor, and LPAC calls completed
- Additional materials requested
- Materials still outstanding
- Decision owner and current blocker
- Can we complete enough diligence before the deadline
- If not, what is the default decision and why
Post-decision record
- Election made: roll / sell / partial roll / partial sale / commit new money / decline new money
- Election amount
- Rationale for decision
- Primary reason for not choosing the alternative
- Conditions or asks made of the GP
- Open items at election
- IC decision and vote record, if applicable
- Dissenting or abstaining views
- Lessons captured for future CV decisions
- Items to add to ongoing manager monitoring
- Items to add to side letter or obligations tracker
- Next review date
- Link to final memo and source documents
Post-close monitoring plan
- Reporting cadence
- Information rights confirmed
- Expected hold period
- Key value-creation milestones
- Operating, debt or refinancing, and exit milestones to monitor
- Follow-on capital needs
- GP contact and internal owner
- Escalation triggers
- When we should revisit the roll/sell decision
- How we will compare actual outcome to the CV underwriting case
Common mistakes
- Defaulting to roll because the process is fast
- Treating the fairness opinion as the diligence
- Failing to capture other LP elections as signal
- Not asking why a traditional exit was not pursued
- Ignoring fee and carry reset economics
- Failing to separate GP liquidity motives from asset-level rationale
- Underwriting the asset based on old fund marks rather than today's price
- Not comparing roll, sell, partial sale, and new-money alternatives side by side
- Treating new money as a relationship decision rather than a fresh underwriting decision
- No record of the decision rationale for future review
- No post-close monitoring plan against the CV underwriting case
How Allocator Desk manages this in a live system
- Creates a continuation vehicle decision workflow with process, fairness, conflicts, alignment, pricing, and election fields
- Captures roll, sell, partial, and new-money rationale in the decision journal
- Links CV materials, LPAC notes, sponsor calls, legal review, tax review, IC memos, and prior GP coverage into one record
- Surfaces patterns across CV transactions by GP, sector, vintage, process quality, and decision outcome
- Tracks post-close monitoring against the underwriting case and original election rationale
- Connects CV decisions to the GP's overall coverage, re-up record, side letter obligations, and portfolio concentration view
- Turns continuation vehicle elections from rushed one-off decisions into a searchable record of process quality, alignment, and LP judgment