Private Markets 2026: What's In and What's Out

Private markets look very different entering 2026 than 12 months ago. Exits are picking up after years of drought, and deal activity is turning a corner. But it’s still hard to raise. It's a tough juggle for asset managers.

LPs are more selective about which managers to back and which to add to their portfolios. Great fund selection has always relied upon finding exceptional people with a sound investment process and philosophy. Operational excellence has become just as important because that’s how managers capture exit windows, win competitive deals, and drive returns.

Here’s what we’re seeing our clients prioritize.

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WHAT'S IN

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IN: Portco & In-House Improvement

BlackRock forecasts lower returns across most private equity strategies from end-2023 to 2029 thanks to higher cost of capital. Returns will be driven by portfolio company improvement instead of financial engineering.

When LPs evaluate those fund managers, a lack of internal operational structure can kill an investment. In-house rigor was a differentiator and is now a requirements. Every GP claims they can deliver returns, but how you run your funds signals how you'll run their capital. Firms with tighter experiences, better reporting, actual risk management, and tighter closing processes win more investor dollars than their competitors with manual processes.

IN: Exit Readiness

Exits need to be prioritized along with fundraising, new investments, investor reporting, tax, audit, and everything else that comes with running a firm. When exit activity picks up, it compounds demands on your IR team: more distribution communications, more LP reporting, more coordination across everyone.

Manual processes that might be tolerable when you're only managing one workflow become disasters when you're juggling many. When your IR team is spending hours chasing sub docs and compliance paperwork for fundraising and new investments instead of managing LP communications, investor experience suffers. Operational readiness across every workflow, not just exits, determines whether you execute cleanly when exit windows open.

IN: AML Risk

The investment adviser AML rule was delayed until 2028, but most US banks and broker-dealers are requiring KYC/AML programs from their clients today. If you’re opening accounts or applying for credit, expect to be grilled about your compliance posture. Institutional investors are asking for the same thing.

These rules came out because of concerns around money laundering through private markets, but the growth of non-institutional investors brings added volume and scrutiny. Manual processes that worked when AML was check-the-box for ERAs and RIAs won't scale. Asset managers are implementing infrastructure now to meet what would otherwise be an operational bottleneck at best and risk mitigation disaster at worst.

IN: Competitive Deals

Deals are picking up after a soft 2024 driven by AI, cloud computing, fintech, and cleantech. The most competitive companies have many suitors and tight timelines to evaluate and fund. If you’re participating in those deals, a day lost on modeling, communicating, or doc execution can cost you a hard-fought allocation. It’s easier for fund managers to meet those deadlines with workflows and data that are integrated across your stack.

IN: Co-investments

Fund managers are fighting for their own allocations into top deals, but they’re also bringing their top LPs into the deals directly or through SPVs. Co-investment opportunities are a big benefit marketed to institutional investors but getting them in requires negotiating for more space, sharing pro rata rights, and making sure everyone can fund on tight timelines.

This intense competition has led to questionable behavior. Some managers are marketing access to these big winners, but they may be raising an SPV that invests into one or more layers of vehicles that own the underlying asset instead of directly owning it. Leading firms are not risking their reputations by playing fast and loose with disclosures and transparency. Co-investments well-executed bring more capital to the table for those portcos, fulfill a fundraising promise to LPs, and create stickier investor relationships.

IN: Plug & Play Software

The best software platforms don’t do everything. Microsoft could force a bundle of Teams with proprietary CRM, project management, and analytics app but instead allows for connection to nearly 2,000 other services. Forcing a closed ecosystem would be worse for customers and slow down adoption of their tools. The same playbook has finally emerged in private markets software.

Most of the leading comprehensive private markets software players have moved from a walled garden that forced trade-offs on modules to an approach that allows integrations with the best specialist tooling. Your subscription documents should be available to complete inside your fundraising portal. Investor data should flow into your CRM and investor registry. Compliance data should connect to your fund admins or transfer agents. While the industry hasn’t gotten there 100%, fund manager demand has really moved the ball forward. Leading investment firms are choosing platforms that play well together instead of being forced into a single vendor’s ecosystem.

IN: Great UX

When there were only institutional and institutional-light investors, the aggregate pain of making private markets investments just wasn’t big enough for managers, counsel, admins, and the investor to improve the experience. You could still have sound internal practices even if everyone hated the process.

Beyond increased individual and retail investor participation impacting regulatory oversight, it’s forcing a focus on investor experience. Robinhood brought true, consumer experience to public markets investing. To target individuals, firms need to mimic user flows like that. In the short term, we’ve seen firms recognize that 95%+ satisfaction rates on investor experience are necessary for retail and a competitive advantage for institutional LPs. But in the long term, this advantage erodes as it just becomes the norm. If you don't have it, you'll be left behind.

IN: Speed Over DIY

Software complexity has outpaced internal implementation capacity. Nearly 80% of SaaS customers churn due to poor implementation experiences, and 60% prefer high-touch professional services over self-service models. The technology industry reflects this: services now account for two-thirds of sector revenue.

For fund managers facing challenging fundraising conditions, every week spent configuring software is a week they’re not closing capital. Firms need to move at the pace of their investors. Expert-led implementation that gets you live in days delivers time-to-value that DIY platforms requiring quarters to configure can't match.

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WHAT'S OUT

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OUT: SPACs

SPACs raised $22.2 billion through November 2025, surpassing 2024's total. But only 38 de-SPAC mergers completed compared to 70 in 2024, 95% of funds were redeemed, and the median SPAC declined 75% from IPO price.

Proven track records and realistic valuations matter more than trends. Firms distracted by those will underperform peers that make smart bets on portfolio and in-house problems on hand.

OUT: Email

Emails are a terrible way to manage a project spread across teams, timezones, and tasks. Whether it’s closing a deal, sharing financials, or closing investors, relying on emails leads to user error galore.

Software platforms bring async communications under one roof according to the needs of any given vertical and the job that needs to be done. That means lawyers tagging other lawyers or fund managers with questions, approvals moving from one stage to the next, compliance and fund formation working hand-in-hand even when they have different priorities, and investors getting aggregated requests instead of one-offs. Anything less is a waste of time.

OUT: Siloed Onboarding

Fundraising and KYC/AML are both investor onboarding functions, but they've operated in silos. Attorneys handle subscription documents while fund administrators manage compliance separately (and manually). Investors enter info twice. Data doesn’t match. Cap calls get delayed and fund managers might have greater risk exposure than they realize.

We see fund managers do two things: recognize that fundraising and AML are one process and use software to structure and unite it. Those firms fundraise faster, call capital quicker, understand their risk profile better, and grow their operations more efficiently.

OUT: Offshore Support

Whether it was software development or client support, when fund managers sought reduced costs, their vendors reacted with offshore support. But in this industry, timing matters at least as much as cost. When firms need to tweak a configuration, they don’t want to submit a request, wait 48 hours for a proposed solution, decide, and then wait days or weeks for it to be enacted. They want people to get on the line and solve their problems right away.

We’re seeing firms prioritize US-based expertise because complex problems require real-time coordination, regulatory knowledge, and immediate action.

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What This Means for 2026

Exits are happening. Funds are distributing capital. Returns are compressing. Individual investors are entering the market while institutional investors are still challenged. Managers are competing over deals. Recovery is underway, but it’s uneven.

All of this activity is backed by thousands of firms and many more thousands of people pushing papers, emails, and spreadsheets just to keep the wheels turning. The private markets tech stack is finally maturing so that operational excellence can be automated, at least by those that prioritize it.

Not every firm that modernizes their infrastructure will become a successful, multi-generation investment firm. But every successful, multi-generation investment firm will have modernized their infrastructure in this time period. The fundraising environment is too competitive, exit windows are too important, and investor expectations are too high.

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