Institutional Limited Partners Association Releases Continuation Fund Disclosure Template

Find the new template here.

In a continuation fund transaction, a general partner (GP) transfers one or more portfolio assets from an existing fund into a new vehicle, which is also managed by this same GP, typically giving existing limited partners (LPs) the option to either “roll” their interest into the continuation fund or “sell” their interest and receive cash proceeds. This new template consolidates the high-level information LPs need for such transactions into a single, standardized document, enabling faster and more transparent roll or sell evaluations.

ILPA is the leading global association of institutional investors in private equity, representing over 600 LPs that collectively manage trillions of dollars in private markets allocations. ILPA’s publications, including model side letter provisions, reporting templates, and best-practice guidance, carry significant weight across the industry, and its recommendations frequently serve as baseline expectations in LP-GP negotiations. ILPA’s publications are industry best-practice tools rather than regulatory mandates, but given ILPA’s influence, GPs should pay attention as LPs could begin to treat it as a de facto standard when evaluating continuation fund transactions.

This release complements ILPA’s 2023 guidance for LPs and GPs on continuation funds. The template distills the transaction rationale, economics, process, and key terms in one place, while incorporating references to direct users to supporting materials for validation and governance. In providing a concentrated data set for all parties, this template encourages accurate point-in-time disclosure as bids evolve and accommodates transactions involving multiple contributing funds.

What the Template Covers

The template organizes disclosure into four sections: Asset(s) Information, Transaction Process, Continuation Fund Return Profile, and Terms, and provides subsections with brief prompts for GPs or their advisors to respond to. 

• Section 1 – Asset(s) Information: Respondents should outline the transaction rationale and value-maximization for existing LPs. This section prompts descriptions of the asset(s) and original thesis with performance versus expectations. Respondents are asked to provide current valuation and methodology (including comparables) and indicate whether a third-party valuation agent or fairness opinion was used and how it was selected. 

• Section 2 – Transaction Process: The template highlights LP election and closing timelines. Respondents should provide details regarding any intermediary or secondary advisor (mandate and fees), alternative exits considered, bid dynamics and pricing, Limited Partner Advisory Committee (LPAC)/LP consent mechanics and conflict waivers, GP benefits (e.g., stapled commitments), the lead acquirer and capital, and any additional commitments for rolling LPs. 

• Section 3 – Continuation Fund Return Profile: Respondents are tasked with providing record date and pricing versus NAV, defining the roll or sell mechanics and any new commitments, and outlining timing of sale proceeds and any deferral. This section requests information on value-creation plans, exit timing, and management team liquidity rationale. Respondents should also include a summary of the latest performance data for any continuation fund(s) the GP currently manages or has managed within the last three years. 

• Section 4 – Terms of the Continuation Fund: This section covers management fees and carry for rolling LPs, with comparisons to the original fund terms; waterfall mechanics, including any crystallized or rolled carry and hurdle status; GP commitment and financing; governance and reporting changes relative to the original fund; applicability of side letters; and allocation of transaction expenses. 

Practical Guidance for LPs and GPs

LPs should request the template at launch for Investment Committee (IC) and LPAC review while relying on definitive documents for final terms and approvals. LPs can use the template as a checklist to speed up preparation of IC memos and governance, focusing on transaction rationale and asset performance, pricing versus NAV and roll or sell mechanics, proceeds timing, and estimated returns. This then allows LPs to integrate third-party valuation and fairness opinions, competitive dynamics, and any GP benefits or stapled capital into conflict assessments and LPAC deliberations. This new template allows for streamlined comparison of fees or carry, additional commitments, and potential dilution when considering a roll.

GPs should prepare for LPs to request the template early and should pre-assemble data and references to complete it consistently across deals. It is important to build a repeatable workflow to populate the template and maintain links to supporting materials, especially recognizing that disclosures are point-in-time. GPs should align advisor mandate scope, fees, and bid summaries to the template, and prepare carry and waterfall analyses tailored to the original fund, including any rolled or crystallized carry. The template ensures governance, reporting, side-letter terms, and expense allocations are presented in terms formatted to streamline LPAC engagement. 

It is important to note that ILPA emphasizes this template is a consolidated summary intended for informational purposes only and does not replace definitive transaction materials or constitute legal, tax, regulatory, investment, accounting, or other professional advice. Recipients should rely on their own advisors when evaluating a transaction and its materials. 

ArentFox Schiff attorneys are available to answer your questions and assist with navigating regulatory changes. Please contact the authors of this article or your AFS attorney contact for more information.