The private equity trend of continuation vehicles (CVs)—a strategy soaring in popularity—is in the spotlight due to a high-profile failure involving United Site Services (USS), a portable toilet rental company. Major financial institutions, including Fortress Investment Group, Ares Management Corp. (NYSE:ARES), and Blackstone Inc. (NYSE:BX), are poised to lose a combined $1.4 billion on an investment in USS that was channeled through a continuation vehicle, according to sources cited by Bloomberg. The Fa ...

Core Insights - The continuation vehicle (CV) strategy is facing scrutiny following a significant failure involving United Site Services (USS), leading to potential losses for major financial institutions totaling $1.4 billion [1][2]. Group 1: Continuation Vehicle Overview - The CV was created by Platinum Equity in 2021 to transition USS from an older private equity fund to a new fund, valuing USS at $4 billion [2]. - The CV allowed investors in the original fund to cash out approximately $2.6 billion without selling the company outright, reflecting a trend to monetize assets amid a sluggish deal-making environment [3]. Group 2: Challenges Faced by USS - USS encountered difficulties despite initial optimism for a post-COVID recovery in events and construction, with higher interest rates negatively impacting both the construction sector and USS's financial health [4]. - The company struggled with debt servicing, which consumed its cash flow, and faced challenges in integrating multiple prior acquisitions [4]. Group 3: Implications for Investors - Platinum Equity is preparing to transfer control of USS to lenders, which may result in total losses for investors in the CV [5]. - The situation underscores the risks associated with continuation vehicles, which accounted for nearly 20% of all private asset exits in the first half of 2025 [6]. - While CVs provide flexibility for private equity firms to retain promising assets, the USS case illustrates the potential for investors to be left with concentrated, illiquid, and failing investments [7].