Billions Down The Toilet As Private Equity Firms Take Bath On Hot New 'Continuation Vehicle' Strategy

Core Insights - The continuation vehicle (CV) strategy is gaining attention due to a significant failure involving United Site Services (USS), with major financial institutions facing a potential loss of $1.4 billion [1] - The CV was created by Platinum Equity in 2021 to transition USS from an older private equity fund to a new fund, allowing investors to cash out approximately $2.6 billion without a direct sale [2][3] - The valuation of USS was set at $4 billion, but the company faced challenges due to higher interest rates impacting the construction industry and its own financial health [3][5] Company-Specific Details - USS struggled with integrating prior acquisitions and faced cash flow issues due to debt servicing, leading to a potential handover of control to lenders [5][6] - The situation underscores the risks associated with continuation vehicles, which represented nearly 20% of all private asset exits in the first half of 2025 [8] - While CVs provide flexibility for private equity firms, the USS case illustrates the dangers of concentrated, illiquid investments that may fail [9]