65% of fund managers have already made the leap. If you're still weighing up your options, you're not alone, but you may be running out of time.
Private markets are at a crossroads. Costs keep climbing, investors are demanding more transparency, and regulatory requirements show no signs of slowing down. With 2026 fast approaching, the question isn't whether operations need upgrading. It's how to do it without breaking the bank or losing your best people.
Enter the lift-out: a strategy that's gained significant traction, with 65% of firms already adopting the model.
What is a lift-out
A lift-out is not the same as traditional outsourcing. Instead of dismantling teams, it transfers your entire operational function - people, processes, and systems - as one unit to a specialist provider. The provider employs your team, integrates them into institutional-grade infrastructure, and ensures your funds continue to be serviced without disruption.
This isn't theoretical. Asset managers pioneered the approach, and now private equity, credit, and real estate managers are following suit. The numbers speak for themselves: 58% cite cost reduction as their primary driver, and 52% want access to skilled talent they couldn't afford in-house.
Why lift-outs are gaining momentum fast
The pressure is coming from all sides:
- Tightening margins cannot carry fixed costs. Your team costs the same regardless of fund size or activity level. Lift-outs convert those fixed expenses into variable costs that scale with your activity.
- Investor scrutiny has intensified. Limited partners want proof your operations can handle growth without adding risk. A lift-out delivers institutional systems and governance without disrupting your investment focus.
- Regulatory demands multiply. Specialist providers live and breathe compliance. They're already equipped for reporting requirements that would cost you months to implement.
- Technology gaps widen. Enterprise platforms cost millions and take years to build. Lift-out providers offer immediate access to integrated systems for reporting, accounting, and investor relations.
The research backs this up: 70% of managers say better technology would make lift-outs more attractive.
When lift-outs miss the mark
Not every fund needs a lift-out. Small managers with lean operations may find limited benefit. Firms with highly tailored processes might struggle with a standard approach.
The sweet spot? Mid-sized managers where back-office operations have grown unwieldy and started consuming leadership attention that should focus on investment performance and fundraising.
The people question answered
"What about our team?" It's the first question every manager asks.
Here's what actually happens: employees often welcome the move. They gain access to larger teams, broader client exposure, and genuine career progression. The alternative (staying in a small team with limited prospects) looks less appealing when you put it like that.
Your risk isn't losing people to the lift-out. It's losing them to competitors who offer better opportunities.
Building investor confidence (not destroying it)
Investors don't fear lift-outs. They welcome them. When executed properly, a lift-out signals forward planning and operational maturity. It shows you're building for scale, not just hoping for it.
The key is clear communication. Explain the continuity (same team, same service), highlight the improvements (better systems, stronger governance), and demonstrate the strategic benefit (more time for investment performance).
Your 2026 reality check
Planning for the next fundraising cycle? Expanding into new markets? Targeting institutional investors? Your current operations may not support those ambitions.
Some uncomfortable questions:
- Can your systems handle 3x the current fund size?
- Do you have contingency plans if key operational employees leave?
- Are your governance frameworks ready for institutional due diligence?
- Can you afford the technology upgrade investors now expect?
A lift-out isn't a magic solution, but it's a proven way to future-proof operations without the capital investment or management distraction of building everything yourself.
Making your decision
The choice comes down to strategic goals. If growth, new fund launches, or institutional fundraising are on your agenda, then operational flexibility becomes business critical. If your current setup already delivers efficiency and scalability, the benefits may be marginal.
The question for 2026: Will your operations support your ambitions, or limit them?
Research shows 65% of managers have already answered that question. The rest are still deciding.
Get the complete strategy guide
Ready for a deeper analysis? Complete the form to download our comprehensive eBook Lift-outs: Can lift-outs lower operational costs and enable growth strategies? It delivers practical frameworks, real-world examples, and a decision toolkit to assess your specific situation.
