For decades, private fund strategies were the domain of institutional investors and the ultra-wealthy. That exclusivity is ending as private strategies migrate into retail vehicles designed to hold illiquid assets within a retail regulatory framework.
As has been widely reported, digital infrastructure has become one of the fastest growing investment structures in recent years, most recently driven by the explosion in demand from firms in the artificial intelligence (AI) industry. This in turn has led to unprecedented needs for capex spending for the construction, expansion and upgrading of data centers, cell towers and networks, fiber optics and other data transmission facilities and power production and transmission.
If we had to define the mood for 2026 in three words, we would choose alert, intentional and institutional. After several years of normalizing longer hold periods and navigating evolving regulatory frameworks, 2026 will see managers permanently vigilant – vigilant in pursuing value creation theses, identifying exit opportunities and embedding robust governance structures to mitigate litigation and regulatory risks.
As of 12:01 am on October 1, 2025, congressionally appropriated funding lapsed for most operations of the United States government. Though the government has shut down, business continues, and market participants that need to interact with the Securities and Exchange Commission (the “SEC”) in order to complete a transaction may
Times of economic volatility often increase disparities between a seller’s valuation and the buyer’s valuation of the same company. Earn-out provisions are one tool frequently used to address such disparities. An earn-out provision requires the buyer to make one or more post-closing payments (the “earn-out consideration”) to the seller if the company being sold (the “earn-out entity”) meets certain milestones during a defined post-closing period (the “earn-out period,” which is usually between one to five years). These milestones may include EBITDA, gross revenue, net income, the expansion of the business into defined geographic or product areas, or other metrics.
With ESG regulation now well embedded across all major jurisdictions, the trend we see for 2025 is about increasingly sophisticated triangulation by private fund managers between the regimes that apply by default (such as mandatory corporate sustainability reporting), those that apply by choice (such as becoming an Article 8 fund within the meaning of the EU’s SFDR or the new for 2024 ESMA ESG Fund Name Guidelines – see summary here) and those that apply by third party request or expectation (such as reporting obligations within side letters). As regimes evolve, the ESG-approach of any fund once identified, chosen and defined must also take into account tracking developments and monitoring compliance.
The “Liberation Day” tariffs and associated countermeasures have created significant market volatility, prompting renewed scrutiny of private fund managers’ compliance with longstanding SEC focus areas such as valuation, investor communications, liquidity, borrowing and related disclosures. Sponsors should document any changes to valuation practices, maintain transparent and timely communications with investors
ESG continues to be a hot topic for 2024 for investors and regulators alike. The specific concerns investors and regulators have – and what they expect to develop over the coming months – differ, however, across jurisdictions, including because of the different maturity of existing regulation between the EU/UK and the US.
In a wave of SEC rulemaking this past year, representing a “new world order” event akin to Dodd-Frank, the SEC has provided itself with a fresh set of tools to increase regulatory and enforcement scrutiny on private funds. Among other things, certain of the rules could result in fundamental changes to market practices and greater disclosure to LPs. While ongoing litigation will determine the fates of the Private Fund Adviser Rules, the Short Sale Disclosure Rule, and the Securities Lending Rule, and while other rules are awaiting final adoption, the SEC concerns underlying the rulemaking will continue regardless.