Private equity has fallen in love with continuation vehicles lately, and now we're seeing why that might be a problem. A spectacular failure involving United Site Services (USS)—yes, a portable toilet rental company—is putting the strategy's risks on full display.

Major financial institutions, including Fortress Investment Group, Ares Management Corp. (ARES), and Blackstone Inc. (BX), are staring down a combined $1.4 billion loss on their USS investment, which was channeled through a continuation vehicle, according to sources cited by Bloomberg.

How This Deal Was Supposed to Work

Here's what happened: Platinum Equity created the continuation vehicle in 2021 specifically to move USS from one of its older private equity funds into a shiny new fund. The maneuver valued USS at a hefty $4 billion.

The continuation vehicle served as an exit alternative for investors in the original fund, allowing them to cash out approximately $2.6 billion without actually selling the company outright. It's an increasingly popular strategy to "monetize assets" when deal-making and IPO markets are moving at a glacial pace.

But here's the catch: the new CV was a single-asset fund, which meant placing a highly concentrated bet on USS's success. All your eggs, one basket, you know the drill.

What Went Wrong

Despite initial optimism about capitalizing on a post-COVID return to events and construction, USS struggled hard. Higher interest rates hammered both the construction industry—a key customer for portable toilets—and USS's own balance sheet, where debt servicing basically ate all the company's cash.

The company also couldn't quite figure out how to integrate its numerous prior acquisitions, which turned out to be a bigger problem than anyone anticipated.

As a result, Platinum is now preparing to hand control of the company over to lenders, including Clearlake Capital and Searchlight Capital Partners. This will likely result in a total loss for the investors in the continuation vehicle. The sources noted that Platinum hasn't made a final decision on USS's fate, and the outcome could still change.

The Bigger Picture on Continuation Vehicles

This situation highlights the hazards of continuation vehicles, a strategy that accounted for nearly a fifth of all private asset exits in the first half of 2025, according to a Jefferies Financial Group analysis cited by Bloomberg.

While CVs offer private equity firms a flexible way to hold onto promising assets longer, the likely catastrophic outcome for USS demonstrates they can also leave new investors holding a concentrated, illiquid, and ultimately failing investment. When a continuation vehicle works, everyone's happy. When it doesn't, well, billions go down the toilet.