Private equity exits follow a familiar script. A firm buys a company, grows it over four to six years, and sells to another buyer or takes it public. The clock runs out, the fund closes, and the relationship ends. But what if a portfolio company is still growing and the firm doesn’t want to let go?
Reeve Waud answered that question in October 2022 when Waud Capital Partners recapitalized Ivy Rehab through a continuation fund – a structure that let existing investors cash out while the firm and its management team rolled their money back in alongside new capital. Morgan Stanley Capital Partners Private Equity Secondaries anchored the transaction, giving WCP a fresh runway to keep building a business it had held since 2016.
What Ivy Rehab Became Under WCP
Ivy Rehab was a physical therapy provider when Waud Capital first invested. Over the following six years, the company’s revenue and clinic base were built up roughly tenfold. By the time of the recapitalization, Ivy Rehab operated more than 450 clinics, including approximately 100 focused on pediatric therapy, and had climbed from 25th to 5th among the largest physical therapy providers in the country.
CEO Michael Rucker, who joined through WCP’s executive partner network, ran the expansion. Rucker and WCP’s wider management team reinvested their own capital in the continuation vehicle – a signal that the people closest to the operations believed there was still room to run.
Why a Continuation Fund Made Sense
Traditional fund structures force a sale whether the underlying business has peaked or not. A continuation fund sidesteps that constraint. Limited partners who want liquidity can exit at a fair market valuation. Those who want to stay, along with new investors, roll into a vehicle specifically designed for the next phase of ownership.
For Waud Capital Partners, the Ivy Rehab recapitalization served as proof that Reeve Waud’s buy-and-build model could generate value well beyond a single fund’s life cycle. Physical therapy, like many of the healthcare specialties WCP targets, rewards patient capital and operational consistency. Cycling through owners every five years creates disruption that patients, clinicians, and referral partners notice. Staying put, and bringing in fresh backing to do so, offered a different outcome entirely.
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