Investor elections in continuation funds, how the workflow runs
· 7 min read · Navys Team
An investor election in a continuation fund is the choice each existing limited partner makes when a sponsor moves an asset out of the original fund and into a new vehicle. Cash out at the stated price, roll the interest into the continuation vehicle, or do some of both. The sponsor sets a price and terms, sends an election notice with a deadline, and each LP returns a form recording its decision. What looks like a single yes-or-no is really a set of linked choices about price, rollover terms, and the documents that follow, all compressed into a fixed window that is usually a few weeks.
This guide covers what LPs are asked to decide, how the notice and deadline sequence runs, which documents each path triggers, and the points where elections stall.
What is an LP actually being asked to decide?
The headline choice is roll or sell, but most continuation fund processes offer a third path and several variations within each. An LP running the maths on a single asset carved out of a blind-pool fund faces a different decision from one choosing between a familiar fund and an unfamiliar one.
The core options are usually these:
- Sell (cash out). The LP takes the price offered for its share of the asset and exits. Its interest in that asset ends at closing.
- Roll (status quo or new terms). The LP moves its interest into the continuation vehicle. Some deals offer a status-quo roll on economics close to the original fund. Others roll everyone into the new vehicle's terms, which may carry a reset fee and carry structure.
- Partial election. The LP sells part and rolls part, splitting a single position across both outcomes.
The decision is not only financial. Rolling means a new holding period, a new fee and carry arrangement, and often a new governing document. Selling crystallises a return but gives up further upside in an asset the sponsor clearly wants to hold. LPs with their own liquidity needs or allocation limits sometimes have the decision made for them.
How does the notice and deadline sequence run?
Continuation fund elections run on a tight, sponsor-driven calendar. The sequence is predictable, but the compression is real, because LP investment committees do not always meet on the sponsor's schedule.
| Stage | What happens | Typical owner |
|---|---|---|
| Transaction notice | Sponsor announces the deal, the asset, the price, and the proposed vehicle | GP / sponsor |
| Data room opens | Valuation materials, legal documents, and the new vehicle's terms are posted | GP and counsel |
| Election window | LPs review, ask questions, and submit election forms | LPs |
| Election deadline | Hard cut-off for returning the form | GP / administrator |
| Default applied | Non-responders are treated per the default election | Administrator |
| Closing | Elections are tallied, documents signed, proceeds paid or interests rolled | All parties |
The election window is where most of the pressure concentrates. LPs are reviewing a valuation set by the sponsor on an asset the sponsor manages, often within two to four weeks, and the advisory committee is reviewing conflicts in parallel. Extensions happen, but they are the sponsor's to grant.
What is the default election, and why does it matter?
Every election notice carries a default: what happens to an LP that does not respond by the deadline. This is one of the most consequential lines in the whole document, because a meaningful share of LPs in any fund will miss a deadline through staff turnover, a stale contact address, or a committee that could not convene in time.
Defaults vary. Some deals default silent LPs to selling, on the view that an investor who does not actively choose to continue should be cashed out. Others default to rolling on status-quo terms, so inaction keeps the LP invested. Neither is neutral, and the choice shapes the final roll rate. An LP that intended to roll but got defaulted into a sale has crystallised a position it wanted to keep, and unwinding that after closing is difficult.
Reading the default carefully, and diarising the deadline against it, is the cheapest piece of risk management an LP can do in these transactions.
Which documents does each election path trigger?
The election form is the start, not the end. Each path opens a different document set, and the paperwork is where a clean decision turns into weeks of execution.
An LP that sells typically signs a transfer or sale instrument moving its interest to the continuation vehicle or the secondary buyers funding the deal. The distinction between the instrument that moves an interest and the one that admits a new holder matters here, and the difference between a transfer agreement and a subscription agreement is worth understanding before signing either. Selling LPs also supply payment direction details and, where the fund has US connections, withholding tax forms.
An LP that rolls signs into the new vehicle: a subscription or adherence document, the continuation vehicle's partnership agreement, and often a fresh set of representations. Rolling LPs usually face a renewed know-your-customer check as well, because they are being admitted to a new legal entity even though the sponsor is unchanged. That re-run of identity and source-of-funds checks mirrors the wider KYC requirements an incoming LP faces in a transfer, and it surprises LPs who assume their existing status carries over.
Partial electors get both document sets, scaled to the split. One position, two paths, two sets of signatures.
Where do continuation fund elections go wrong operationally?
The legal structure of these deals is well trodden. The failures are almost always operational, and they cluster in a few places.
The first is the deadline itself. Election windows are short, LP contact lists go stale between funds, and a notice sent to a departed analyst can sit unread until the window closes. The result is an unintended default.
The second is version control on the election form. When LPs mark up forms, ask for carve-outs, or submit partial elections by email, the sponsor and administrator end up reconciling several versions of the same document across a large investor base. Tallying a roll rate from a spreadsheet of emailed PDFs is slow and error-prone.
The third is the KYC refresh. Rolling LPs are admitted to a new entity, so the administrator re-runs checks, and the exceptions (a trust in the chain, an expired document) surface late, after the election is already made but before closing can settle.
The fourth is reconciliation at closing. Proceeds for sellers, rolled interests for continuers, and split positions for partial electors all have to be computed and matched against the register before the deal can close. A single mis-tallied election throws off the capital accounts.
A short checklist for LPs facing an election
The decision is yours, but the process rewards preparation. These steps keep an LP from being carried by the default or scrambling at the deadline.
- Confirm who received the notice. Make sure it reached the person who can act, not a mailbox nobody checks.
- Read the default first. Know exactly what happens if you do nothing, and diarise the deadline against it.
- Separate the price question from the terms question. Rolling on new economics is a different decision from rolling at all.
- Pull the document set for your intended path early. Do not wait until the deadline to discover a KYC refresh is required.
- Decide partial versus all-or-nothing deliberately. A split position doubles the paperwork, so choose it for a reason.
The deal timeline is fixed by the sponsor. What an LP controls is whether its own answer is ready before the window shuts.
Where to start
Navys brings continuation vehicle elections, data rooms, and investor communications into one structured workspace, so notices, deadlines, and election forms sit in a single place rather than scattered across email. If you are mapping how these transactions run end to end, our continuation vehicle process guide walks through the legal and operational stages, and you can see what the email-driven version of this work costs in The True Cost of LP Transfers.