Which of the following best describes a characteristic of GP-led deals?

GP-led deals are a significant aspect of private equity transactions, primarily characterized by the involvement of General Partners (GPs) in managing and facilitating investment opportunities, often involving their existing portfolio companies. The option suggesting that they frequently involve the creation of continuation funds is particularly relevant here.

In GP-led transactions, GPs may choose to create continuation funds to manage their existing investments, especially when they believe that further value can be derived from certain assets. This allows them to provide liquidity to limited partners (LPs) who might wish to exit while also giving them the opportunity to continue benefiting from the investment's future growth potential. By setting up a continuation fund, GPs can effectively extend the lifespan of an investment rather than liquidating it, thereby aligning the interests of both exiting LPs and those wishing to stay invested.

This aspect of GP-led deals is crucial in the private equity landscape, as it reflects GPs' proactive management strategies and their desire to realize value from their portfolios, further enabling them to deliver returns.