Private markets are changing faster than ever by Rupert Bell, CEO

One month into 2025, and hoping for signs of a recovery, the world of private markets seems to be undergoing seismic change.

We are hearing a lot of positive stories, with a growing number of firms securing new funds and willing to deploy into new deals. For those on the right side of the line, it’s a good environment – if you have a great story, a point of differentiation and LPs are finding you. With fresh capital, it can be a great time to invest.

On the other hand, many are struggling to gain traction in fundraising or access high-quality deal flow, creating a more challenging environment. This divide is becoming increasingly clear, with a stark contrast between the ‘Haves’ and the ‘Have Nots.’

Are there any patterns to discern who falls where? Let me offer a couple of thoughts.

Succeeding in today’s market requires a more sophisticated model than even four or five years ago. LPs seek a genuinely differentiated strategy, whether by sector, geography, sourcing and operational insight. The traditional ‘Good Chap’ model that has served so many firms well for decades, especially in the mid-market, is no longer enough.

Valuations are consistently higher and force a different kind of process management and attitude to risk. Deals pick you these days, and if you want to win assets, especially in hot sectors, you have to be bold and know what you are doing. This requires deeper sector insights, enhanced networks for origination and diligence, and a more comprehensive and fully resourced game plan for what you will do post-deal.

In a business that is more people-intensive than before, the war for talent is fierce. We have seen a much higher level of potential mobility at senior levels, as experienced investors critically re-evaluate the future of their existing platforms. For them and for new entrants at the start of their careers, finding a culture where they can contribute real value, grow and be rewarded is a top priority and those firms who work to position themselves as employer of choice are gaining the upper hand.

Many of the largest platforms, which have dominated fundraising and hiring in recent years are now going through a period of consolidation and right-sizing. A material number of former employees are quietly re-entering the job market. Alongside headcount reductions, entire office closures are becoming more common as firms adjust their strategies. There is a shake-out happening that may open opportunities as well as threats.

Paradoxically, against that backdrop, the level of recent partner hiring in 2024 has been close to an all-time high. For example, in my local DACH market, we saw over 30 new appointments, excluding internal promotions. While some hires were replacing leavers, many were triggered by the launch of 2nd or 3rd fund strategies, or new market entries. This suggests that even in a fundraising lull, firms anticipate a strong bounce back and are confident in the industry's medium-term outlook.

There is also a discernible undercurrent of entrepreneurialism with many seasoned investors looking to launch their own platforms, some having already secured investment. The challenges here are significant, as noted above, but a focused approach - targeting specific, well-defined niches combined with the raw drive of new founders - can be highly appealing to LPs. Many well-known brands have struggled to replicate the success of their early vintages, which were fuelled by a start-up mindset.
 
This is an intriguing moment in the evolution of private markets. Moves being made right now will determine how the next five years will play out.

If you would like to compare thoughts or discuss your options, either as a firm or as an individual, get in touch.