Private Equity Secondaries, Continuation Vehicles & LP Liquidity
GP-Led Continuation Fund Secondary Pricing & LP Cash Formula
Calculate GP-Led Continuation Vehicle (CV) Implied Transaction Value (Reference_NAV * Bid_Pct), Crystallized GP Carried Interest on Selling LPs, Selling-LP Net Cash Wire, and Secondary Buyer Day-1 Mark-to-NAV Gain.
Model selling-LP cash elections vs secondary buyer discounts in GP-led Continuation Vehicles!
When a private equity sponsor transfers a trophy compounder from an expiring vintage fund into a GP-Led Continuation Vehicle (CV), existing LPs receive a status-quo election to either ROLL into the new vehicle or SELL their stake to incoming secondary buyers at a negotiated Secondary Bid % of Reference-Date NAV (e.g., 92% of NAV)! On the Selling LP slice (Selling_Share), Implied Gross Sale Value equals (Reference_NAV * Bid_Pct) * Selling_Share, from which Crystallized GP Carried Interest = MAX(0, (Implied_CV_Value - Cost_Basis) * Selling_Share * Carry_Rate) is deducted (typically rolled by the GP into the CV for alignment!), leaving Selling-LP Net Cash Proceeds! Meanwhile, secondary buyers marking their purchase to 100% Reference NAV book an immediate Day-1 Mark-to-NAV Uplift = (1 - Bid_Pct) / Bid_Pct!
Verify on a Single-Asset Continuation Fund—Reference_Date_NAV = $200.00M (B2), Lead_Secondary_Bid = 0.92 (92.0% of NAV, B3 -> Implied CV Transaction Value = $184.00M in E2), Selling_LP_Election_Share = 0.60 (60% sell / 40% roll, B4), Original_Fund_Cost_Basis = $100.00M (B5), and GP_Carry_Rate = 0.20 (20%, B6): Crystallized Carry on the 60% selling slice is MAX(0, (184 - 100) * 0.60 * 0.20) = $10.08M (E4); Selling-LP Net Cash Distribution is ($184M * 0.60) - $10.08M = $110.40M - $10.08M = $100.32M (E3); and Secondary Buyer Day-1 Mark-to-NAV Uplift is (200 - 184) / 184 = 0.0870 (+8.70% Day-1 markup in E5)!
| GP-Led CV Metric ($200M NAV, 92% Bid, 60% Sell Share, $100M Basis, 20% Carry) | Formula | Verified Output |
|---|---|---|
| Implied CV Transaction Value ($M) | Reference_NAV * Secondary_Bid_Pct | $184.00M ($200.00M @ Par Bid) |
| Selling-LP Net Cash Proceeds ($M) | CV_Val * Sell_Pct - Crystallized_Carry | $100.32M ($108.00M @ Par Bid) |
| Crystallized Selling-Slice Carry | MAX(0, (CV_Val - Basis)*Sell_Pct*Carry) | $10.08M ($12.00M @ Par Bid) |
| Secondary Buyer Day-1 NAV Uplift | (Reference_NAV - CV_Val) / CV_Val | 0.0870 (+8.70%; 0.0000 @ Par) |
Continuation Vehicle Selling-LP Net Cash Proceeds Formula
Validate Reference_NAV > 0, 0.30 <= Bid_Pct <= 1.30, 0 < Selling_Share <= 1, Cost_Basis > 0, and 0 <= Carry_Rate < 0.50!
=LET(nv_r, B2, bd_p, B3, sl_s, B4, bs_c, B5, cr_r, B6, IF(OR(nv_r <= 0, bd_p < 0.3, bd_p > 1.3, sl_s <= 0, sl_s > 1, bs_c <= 0, cr_r < 0, cr_r >= 0.5), "Invalid Continuation Fund Terms", LET(cv_v, nv_r * bd_p, gp_c, MAX(0, (cv_v - bs_c) * sl_s * cr_r), ROUND(cv_v * sl_s - gp_c, 2))))Par-Bid (100% of NAV) Secondary Clearing Check
Raise Secondary_Bid B3 to 1.00 (100% of NAV): Implied Value E2 hits $200.00M, Crystallized Carry E4 rises to $12.00M, Selling LPs net $108.00M in E3, and Buyer Day-1 Discount Uplift E5 drops to 0.0000!
=IF(ISTEXT(E2), E2, ROUND((B2 - E2) / E2, 4))Try the example
Use the original values or change them to test your understanding.