PE managers mush for higher carried interest in continuation deals

Private equity firms are increasingly seeking enhanced carried interest arrangements on single-asset continuation vehicles, as managers look to capture a larger share of future gains from investments they are holding beyond the life of their original funds, according to a report by Bloomberg.

The report cites research by PJT Partners as revealing that so-called “super carry” — typically defined as carried interest above the standard 12% to 20% range — featured in almost a third of new single-asset continuation vehicles launched during the first half of 2026. That represents nearly three times the proportion recorded a year earlier.

The trend reflects the growing negotiating power managers can retain over their most sought-after assets, even as much of the private equity industry continues to face challenges exiting investments and returning capital to limited partners.

Parthenon Capital Partners, for example, sought enhanced economics as part of a transaction designed to extend its ownership of Kroll Bond Rating Agency. HarbourVest Partners ultimately backed the deal, enabling Parthenon to raise more than $1.7bn for the single-asset continuation vehicle after other investors resisted the proposed terms.

Super-carry arrangements typically come with performance hurdles, meaning managers only receive the additional share of profits if a continuation vehicle generates sufficiently strong returns. Thresholds can include an internal rate of return of 30%, a three-times multiple on invested capital, or a combination of performance measures.

David Perdue, a partner in PJT’s strategic advisory group, said the structures can provide sponsors with an incentive to continue creating value after assets are transferred into continuation vehicles.

For investors, agreeing to enhanced carry can be a way of securing access to highly competitive assets, particularly where a manager has a strong track record or extensive knowledge of the underlying business. However, the additional economics can also raise the bar for investors assessing whether the potential returns justify the terms.

Percheron Capital, for instance, secured super-carry provisions for a $1.62bn continuation fund backed by investors including Blue Owl Capital, Iconiq and Warburg Pincus after some potential backers initially resisted the structure.

Other managers have also secured enhanced carry on continuation transactions. Leonard Green & Partners’ Sage fund agreed to a super-carry arrangement for Falfurrias Management Partners’ investment in technology advisory business Crosslake, while Accel-KKR has secured premium economics on some continuation vehicles, alongside higher return thresholds.

The approach has not been universally accepted. Lightspeed Venture Partners proposed a 25% carry arrangement as part of a planned $600m multi-asset continuation fund, but lead investor Coller EQT rejected the higher fee structure, according to people familiar with the negotiations.

Private equity firms are increasingly seeking enhanced carried interest arrangements on single-asset continuation vehicles, as managers look to capture a larger share of future gains from investments they are holding beyond the life of their original funds, according to a report by Bloomberg.

The report cites research by PJT Partners as revealing that so-called “super carry” — typically defined as carried interest above the standard 12% to 20% range — featured in almost a third of new single-asset continuation vehicles launched during the first half of 2026. That represents nearly three times the proportion recorded a year earlier.

The trend reflects the growing negotiating power managers can retain over their most sought-after assets, even as much of the private equity industry continues to face challenges exiting investments and returning capital to limited partners.

Parthenon Capital Partners, for example, sought enhanced economics as part of a transaction designed to extend its ownership of Kroll Bond Rating Agency. HarbourVest Partners ultimately backed the deal, enabling Parthenon to raise more than $1.7bn for the single-asset continuation vehicle after other investors resisted the proposed terms.

Super-carry arrangements typically come with performance hurdles, meaning managers only receive the additional share of profits if a continuation vehicle generates sufficiently strong returns. Thresholds can include an internal rate of return of 30%, a three-times multiple on invested capital, or a combination of performance measures.

David Perdue, a partner in PJT’s strategic advisory group, said the structures can provide sponsors with an incentive to continue creating value after assets are transferred into continuation vehicles.

For investors, agreeing to enhanced carry can be a way of securing access to highly competitive assets, particularly where a manager has a strong track record or extensive knowledge of the underlying business. However, the additional economics can also raise the bar for investors assessing whether the potential returns justify the terms.

Percheron Capital, for instance, secured super-carry provisions for a $1.62bn continuation fund backed by investors including Blue Owl Capital, Iconiq and Warburg Pincus after some potential backers initially resisted the structure.

Other managers have also secured enhanced carry on continuation transactions. Leonard Green & Partners’ Sage fund agreed to a super-carry arrangement for Falfurrias Management Partners’ investment in technology advisory business Crosslake, while Accel-KKR has secured premium economics on some continuation vehicles, alongside higher return thresholds.

The approach has not been universally accepted. Lightspeed Venture Partners proposed a 25% carry arrangement as part of a planned $600m multi-asset continuation fund, but lead investor Coller EQT rejected the higher fee structure, according to people familiar with the negotiations.