May Smith and Emily Szasz (Freshfields) examine some of the key tax considerations that arise in relation to the transfer of assets into a continuation fund.
What are continuation funds?
Over the last couple of years it has become more challenging for private equity buy-out funds to exit from their investments. M&A and IPO markets have been sluggish due to the impact of a high interest rate and high inflationary environment together with other macro and geopolitical factors which have in turn led to a value gap between buyers and sellers. Some sponsors have in any event eschewed these traditional exit routes for assets where they see significant future value creation opportunity and upside beyond the typical holding period even where there might be a willing third party buyer.
The traditional three to five year hold period for a buy-out fund has therefore lengthened and it...
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May Smith and Emily Szasz (Freshfields) examine some of the key tax considerations that arise in relation to the transfer of assets into a continuation fund.
What are continuation funds?
Over the last couple of years it has become more challenging for private equity buy-out funds to exit from their investments. M&A and IPO markets have been sluggish due to the impact of a high interest rate and high inflationary environment together with other macro and geopolitical factors which have in turn led to a value gap between buyers and sellers. Some sponsors have in any event eschewed these traditional exit routes for assets where they see significant future value creation opportunity and upside beyond the typical holding period even where there might be a willing third party buyer.
The traditional three to five year hold period for a buy-out fund has therefore lengthened and it...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
