What characterizes a GP-led transaction?

A GP-led transaction is characterized by a general partner (GP) who initiates a process to reorganize or manage a particular investment fund, often involving a continuation fund. In this context, the manager is looking to retain certain assets in the portfolio, while potentially offering select investors the opportunity to invest alongside the GP in a new or continuation vehicle that carries the existing assets forward. This facilitates a transition while providing liquidity options for existing limited partners (LPs) who might wish to exit at this juncture.

The conceptual framework of a GP-led transaction rests on the GP's initiative to manage assets through an alternative fund structure, such as a continuation fund, designed to optimize returns and extend the life of specific investments that may still hold significant value. This approach typically emphasizes the goals of flexibility and strategic asset management without the need for a complete liquidation or the formation of an entirely new fund from scratch.