This September's SuperReturn US West in Los Angeles offered a snapshot of a private markets industry that has stopped waiting for conditions to improve and started adapting to them. With fundraising challenges persisting, liquidity pressures continuing and investor expectations evolving, managers are finding new ways to navigate an increasingly complex environment.
Across discussions covering private equity, private credit, secondaries and private wealth, several themes emerged. These include the evolution of liquidity solutions, the growing importance of differentiation, the practical application of AI and the challenges associated with expanding private markets access.
Liquidity Remains a Priority, but the Path Forward Is Evolving
The need to generate distributions continues to shape the private markets landscape. With holding periods extended and traditional exit activity recovering unevenly, GPs remain under pressure to return capital to LPs.
Panelists expressed optimism about a recovery in M&A but cautioned against expecting a sudden surge in transactions, instead noting that volume will improve gradually as buyers and sellers adjust their valuation expectations.
Meanwhile, continuation vehicles and other secondary transactions have become increasingly important liquidity tools. A recurring theme at the conference was that GP-led continuation vehicles are no longer simply a response to a difficult exit environment. They are becoming an established part of the private equity lifecycle, allowing managers to retain ownership of high-conviction assets while offering existing investors an opportunity for liquidity. However, panelists stressed that these transactions are not appropriate in every situation. A clear rationale, alignment between GPs and LPs, transparency and a credible plan for additional value creation remain essential.
Differentiation and Discipline in Focus
As fundraising remains challenging, LPs have become increasingly selective about where they allocate capital. Discussions highlighted a bifurcated market in which established managers with demonstrated track records and specialized firms with compelling strategies may be better positioned to attract commitments. LPs are examining realized returns, consistency across market cycles and the specific sources of value creation. They also want to understand how a particular strategy fits within their broader portfolios and what distinguishes one manager from another.
The importance of specialization was particularly evident in discussions about private credit. While panelists remained positive about the asset class's long-term growth, they acknowledged increased competition in certain areas of direct lending. Opportunities in asset-based finance, infrastructure lending and opportunistic credit are attracting greater attention as managers look beyond more crowded segments.
Across strategies, panelists emphasized the importance of maintaining investment discipline and demonstrating capabilities through specific examples rather than relying on performance figures alone. Long-term relationship building was another recurring theme, with consistent engagement outside active fundraising periods helping managers build familiarity and trust with LPs.
AI Moves from Experimentation to Implementation
Artificial intelligence featured prominently throughout discussions at the conference, with speakers addressing both the opportunities it creates and the risks it poses to existing investments. For private equity managers, AI is increasingly influencing how potential investments are evaluated. One panelist even discussed how their firm has created an AI member of their investment committee (without voting rights).
AI is also becoming a more significant component of portfolio company value creation. Panelists shared examples ranging from using AI applications in the energy sector involving weather forecasting and electrical grid management, to applying the technology within portfolio companies to improve supply chain management and pricing.
At the same time, concerns about AI-related disruption are influencing investment decisions, particularly in software. Private credit panelists discussed growing scrutiny of software businesses, including whether their competitive advantages can withstand AI disruption and how changing valuations could affect existing investments. For lenders, these developments are placing greater emphasis on assessing the durability of business models and the risks associated with lending to software companies.
Expanding Private Markets Access Raises the Importance of Investor Education
The continued expansion of private markets into the private wealth channel was another major focus, with panelists discussing the opportunities and challenges associated with reaching a broader investor base. As evergreen funds and other investment structures make private markets more accessible, improvements in technology are helping integrate alternative investments more seamlessly into wealth portfolios.
Panelists emphasized that education is essential to ensuring investors understand these products, particularly their liquidity limitations, investment horizons and role within a diversified portfolio. As managers compete for private wealth allocations, the ability to communicate complex strategies clearly and work effectively with financial advisors is becoming increasingly important.
Looking Ahead: Adapting to a Changing Environment
Taken together, the discussions at SuperReturn US West reflected an industry focused on adapting to current market conditions rather than waiting for a return to the environment of previous years. Whether developing new liquidity solutions, refining investment strategies, incorporating emerging technologies or reaching new investor audiences, managers are navigating an environment that demands flexibility alongside discipline.
These developments also have important communications implications. As investors become more selective, managers must clearly articulate what differentiates their strategies, demonstrate their ability to execute and provide concrete evidence of the value they deliver. In an increasingly competitive market, a clear and credible narrative, supported by tangible results, will be essential to standing out.