Single-Asset Continuation Fund: Legal Transfer Decisions

A single-asset continuation fund moves an investment into a new vehicle managed by the same sponsor while existing investors decide whether to sell or continue. The legal work has to connect the asset transfer, conflicts process and investor elections. A signed purchase agreement alone leaves important parts of that process unresolved.

Start with the existing fund documents and the reason for the proposed transaction. Identify whose approval is required, what investors need to evaluate their choices and how the new vehicle will fund the transfer. The structure should answer the actual portfolio problem and make the sponsor’s incentives visible.

Establish why the continuation vehicle is being proposed

Ask the general partner to explain the investment rationale and the alternatives considered. A proposal to retain an asset, provide investor liquidity or fund further investment should identify the specific need. Connect the rationale to the existing fund’s position and the portfolio company’s expected requirements.

The ILPA continuation-vehicle guidance, October 20, 2026 provides a current framework for evaluating process integrity, conflicts, pricing and investor decisions. It presents best practices for fact-specific transactions. Review the full guidance alongside the fund documents before deciding which measures the transaction will adopt.

Give investors a coherent explanation of the proposed solution. Identify which entity sells the asset, which entity buys it, who controls those entities and where the transfer proceeds go. The sponsor’s role on both sides makes the conflicts process part of the transaction’s substance.

Keep the commercial rationale consistent across the investor presentation, approval materials and transaction documents. If the rationale changes during negotiations, update the record and explain the change. A process built around one stated objective can become difficult to evaluate when the final terms serve a different objective.

Read the governing documents before assigning approvals

Collect the existing limited partnership agreement, amendments, side letters, co-investment documents and relevant portfolio-company agreements. Identify the transaction powers, transfer provisions, conflicts terms and consent requirements that may apply. Give counsel the current executed documents rather than a fundraising summary.

Map the existing fund’s authority

Ask fund counsel to identify the authority for the proposed asset transfer and any required approvals or notices. Record the relevant provisions and conditions. The transaction team should understand which steps are permitted under the existing documents and which require a separate consent, amendment or other action.

Define the LPAC’s actual role

The limited partner advisory committee’s role depends on the governing documents and applicable law. ILPA’s guidance focuses on its oversight of the sponsor’s management of continuation-vehicle conflicts. Have counsel distinguish a conflicts waiver from approval of the transaction’s economics, an investor’s individual election and any other required consent.

Check side letters and co-investment rights

Identify information, consent, transfer and other rights that may affect the process. Review how a rolling investor’s protections will be reflected in the new vehicle and disclose material differences. Co-investors may have separate documents and decision rights; their position needs its own analysis in the transaction map.

Document conflicts with enough detail to evaluate them

Prepare a transaction-specific conflicts inventory. Identify the sponsor’s roles, compensation, allocation decisions and relationships with advisers or proposed buyers. Explain how the process addresses each issue and which decision-maker will review the proposed treatment.

A general disclosure that the sponsor has conflicts leaves the investor to infer the actual effect. Describe how sale proceeds, fees, carried interest and reinvestment are treated under the proposed terms. If an adviser has a relevant relationship with the sponsor, include it in the information counsel evaluates for disclosure.

Retain the materials supplied to the LPAC and the questions raised during its review. Record the scope of any decision or waiver and any conditions attached. A broad characterization of “LPAC approval” can obscure whether the committee addressed the specific conflicts now present in the final transaction.

The sponsor remains responsible for managing the process within its applicable duties and documents. Counsel should review the legal basis for that responsibility and the committee’s role. Avoid assigning a universal fiduciary duty to LPAC members or presenting a committee decision as a substitute for the sponsor’s own obligations.

Support the transfer price with an intelligible process

Describe how the price was established and what evidence investors can inspect. Identify the process used to obtain bids or other independent price validation and explain relevant limitations. The investor needs to understand both the proposed value and the way the sponsor arrived at it.

Review the scope of any fairness opinion or other adviser assessment. Identify the provider, engagement terms, assumptions and information considered. An opinion addresses the matter described in its terms; counsel and investors still need to evaluate the broader process and documents.

The SEC’s announcement, October 31, 2024 identifies the adviser-led secondaries rule among the private-fund-adviser rules that were vacated. A current opinion requirement therefore needs an actual legal, contractual or negotiated basis. The vacated rule alone supplies no current mandate.

Ask counsel to evaluate other applicable adviser obligations and the proposed transaction’s facts. The absence of that vacated rule leaves the governing documents, remaining law and process commitments requiring their own review. Keep recommended safeguards and binding obligations identified separately in the approval record.

Give investors a usable sell-or-roll decision

Prepare an election package that explains the asset, transfer price, transaction costs, new vehicle terms and available choices. Identify the documents an investor must sign and the consequences of each choice. Explain treatment of an incomplete or missing response using the actual proposed documents.

Build the election calendar from the applicable agreements and the process being offered. ILPA’s current guidance recommends sufficient review time and informed access to materials. Counsel should identify binding timing requirements separately and assess whether the proposed period gives investors a workable opportunity to evaluate the final package.

Distribute changes consistently. If material terms change during the election process, identify what investors have already received and ask counsel how the change affects information sharing, timing and elections. An updated attachment in one investor’s email thread can leave the broader process working from inconsistent information.

Provide a clear route for questions about the transaction and documents. Record substantive answers and consider whether the same information should be shared with other affected investors. The goal is an election based on accessible, consistent information rather than an assumption that every investor can reconstruct the terms independently.

Explain the new economics without market-wide assumptions

Compare the existing and proposed fee and carried-interest arrangements using the actual terms. Identify the treatment of selling investors, rolling investors and the sponsor’s reinvestment. Explain material changes and the assumptions supporting any model supplied to investors.

Use a like-for-like comparison where feasible. A headline fee percentage can leave out the base on which it is charged, additional expenses, duration or other relevant terms. Have finance and legal advisers check that the model and disclosure describe the same economic arrangement.

Review how transaction costs are allocated among the existing fund, new vehicle and other participants. Record the contractual basis and the proposed disclosure. If an investor’s proceeds or continuing interest bear a cost, show how that treatment appears in the election materials and closing statement.

Avoid treating a customary carry rate, participation threshold or rollover percentage as a universal term. The actual negotiated economics and funding commitments govern this transaction. Ask for evidence behind assumptions and identify the decisions required if elections or financing differ from the working model.

Connect the asset transfer with funding and consents

The purchase agreement should identify the asset or interests being transferred, the seller, the buyer and the agreed consideration. Reconcile those terms with the portfolio company’s ownership records and the new vehicle’s capitalization. Make sure the legal transfer sequence matches the election and funding mechanics.

Review portfolio-company shareholder agreements, debt documents and material contracts for applicable transfer or change-of-control requirements. Identify the consent or other action needed for each. A sponsor remaining involved after the transfer can still leave contractual requirements to be checked against the actual structure.

Ask tax advisers to evaluate the proposed transfer and investor elections. Investor circumstances and vehicle structure can affect the analysis. Avoid promising tax neutrality or identical treatment to all rolling investors without the necessary advice and supporting documents.

Maintain a funds-flow record that ties investor elections, new commitments, debt funding, expenses and transfer proceeds together. Identify conditions to funding and the consequence of any shortfall. A conditional commitment should stay visible as a dependency until the relevant condition is resolved.

Assign the decisions each adviser must resolve

Alex Lubyansky’s general M&A approach calls for delineating each adviser’s responsibilities. A continuation transaction gives that point a concrete application. Fund counsel can address the governing fund documents and conflicts process, M&A counsel can address the transfer and portfolio-company consents, and tax counsel can address the proposed elections. The engagement discussion needs to identify who reconciles their advice when a change affects more than one workstream.

In this March 12, 2026 episode of the Leo Landaverde M&A Podcast, Alex explains responsibility allocation beginning at 13:22. This is his general approach to deal-team scope, applied here to the documents in a continuation transaction.

Create a closing checklist that connects each approval, consent, election and funding step to its supporting evidence. Fund counsel and M&A counsel should agree who verifies each item. Keep committee decisions, investor notices and the final disclosure package alongside the executed transaction documents.

Reconcile the final investor population with the new vehicle’s books and governing documents. Confirm the terms applicable to each investor and the treatment of relevant side-letter protections. Where an approved deviation exists, retain the disclosure and decision supporting it.

Carry ongoing reporting, governance and expense responsibilities into an operating calendar. Identify who will supply information to investors, maintain records and monitor conditions or commitments that survive closing. A new vehicle creates continuing relationships that need an accountable process after the transfer is complete.

For an engagement assessment, bring the fund documents, proposed structure, draft investor package and pricing-process materials. Identify the decisions already made and those still open. Acquisition Stars handles M&A transaction work and coordinates with appropriate fund, securities and tax counsel on specialist issues.

Review our M&A services and securities-law services, or submit transaction details for a scope discussion. This article provides general information. Advice for a particular continuation transaction requires review of the governing documents, current law and investor circumstances.