The six levels, one at a time. No. 4: Vehicle
Wrappers Matter
Nobody buys the box. Everybody ends up owning it.
By Katriona Lee, Reuben AI. Updated .
The short answer
A vehicle is the structure an investment is held through: an SPV, a feeder or a continuation fund. Its terms decide who gets paid first, what fees apply, how conflicts are handled and how you get out, so the same asset in a different wrapper is a different investment.
The pitch is about the asset. The term sheet is about the asset. The committee debates the asset. Then the money goes into a vehicle whose documents run longer than the investment memo, and most of them get read once, by a lawyer, at the end.
Pick a wrapper and see what it quietly decides.
One deal, its own box.
What it decides
- / Who sits on the board and what investors can veto
- / Fees and carry on this deal alone
- / How and when you can sell
Watch for
Rights that look generous on paper but cannot be exercised in practice.
The wrapper changes what you own
Two investors back the same company. One holds it directly. The other holds it through an SPV with a preferred return to the sponsor, a fee on the way in and limited say on the way out. Same company, same price. Different investment.
Continuation funds deserve extra care
In a continuation fund the manager is selling an asset from one fund it runs to another fund it runs. That can be a sensible way to keep backing a good asset. It also puts the manager on both sides of the price, which is why the pricing process and how the conflict was handled matter as much as the asset itself.
The test
Read the vehicle terms as closely as the strategy. Then link what you find to the deal beneath and the fund above, so a term that changes the economics shows up in the memo, not just in the legal file. More on the vehicle level.
Vehicle
SPVs, feeders and continuation funds.
What to check
Governance, fees, waterfall, conflicts, liquidity and the rights the vehicle gives investors.
Typical evidence gaps
Unclear conflict handling, missing valuation policy, untested transfer or exit rights.
Receives from below
Findings from deal level, with sources attached.
Passes up
How vehicle terms change the investor's economics and control over the deal. Next: fund.
Previous: To Fund or Not to Fund. Next: Back the Jockey, Check the Stable.
Questions and answers
What is a vehicle in private markets?
A vehicle is the structure an investment is held through, such as an SPV, a feeder or a continuation fund. It is one of the six levels of private markets, between the deal and the fund.
Why do vehicle terms matter?
They decide who gets paid first, what fees apply, how conflicts are handled and how an investor can exit. The same asset held through different vehicles can be a different investment.
What is a continuation fund?
A vehicle a manager sets up to move one or more existing assets from an older fund into a new structure, giving existing investors a choice to sell or roll over.
What should vehicle diligence check?
Governance, fees and waterfall, conflicts, valuation policy, liquidity and transfer rights, and how all of these change the economics of the underlying deal.
Does Reuben AI review legal terms?
Reuben AI keeps vehicle terms and findings linked to the deal and fund records so the team can read them together. It does not give legal advice; judgement stays human.
Reuben AI is built as one linked record across all six levels of private markets. See it on your own deals, or explore what it could add for your platform's clients.
Read next: The six levels of private markets diligence or browse the Resource Hub.