2026: Selective Recovery, Strategic Adaptation

2026 is proving to be a year of adaptation in private equity (PE). While deal making and exits rebounded during 2025, the recovery proved narrower and more selective than many had hoped. As a result, sponsors are increasingly focused on adapting to prevailing market conditions rather than waiting for a return to the environment that characterised the boom years.

At the beginning of 2025, optimism had returned to boardrooms and investment committees. Inflation appeared to be moderating, interest rates were gradually easing and financing markets had become increasingly receptive to sponsor-backed transactions. Combined with a substantial backlog of unrealised portfolio company investments, these developments fuelled expectations of a broader recovery in PE deal making and exits.

Despite improved transaction volumes and increased exit activity in 2025, sponsors continued to operate in challenging conditions, including against a backdrop of trade tensions and geopolitical instability. Global buyout deal value increased from USD628 billion in 2024 to USD904 billion in 2025, while global buyout-backed exit value rose from USD486 billion to USD717 billion, according to Bain & Co. However, much of that activity was concentrated in larger transactions and among the highest-quality assets, highlighting the uneven nature of the recovery.

So far, 2026 has reinforced those trends while presenting additional challenges, including volatility associated with artificial intelligence, liquidity pressures in private credit markets and the conflict involving Iran and the resulting pressure on energy prices. Global buyout activity in the first quarter of 2026 exceeded activity in the corresponding period of 2025, despite a noticeable slowdown from the elevated levels reached in late 2025, according to Bain & Co.

Against a backdrop of elevated financing costs, valuation pressure and continuing investor demands for liquidity, traditional value creation strategies have evolved towards a greater focus on operational transformation, technology adoption and artificial intelligence initiatives.

One notable market trend has been renewed sponsor interest in investment management, fund administration and corporate services businesses, driven by their recurring revenues, resilient business models and close alignment with the continued growth of private capital markets. Recent examples include Warburg Pincus’ investment in Aztec Group, Jacobs Capital’s acquisition of Highvern and its combination with Permian, and Gen II Fund Services’ acquisition of Crestbridge.

Another notable trend has been the resurgence of public-to-private transactions. Listed businesses have presented opportunities to acquire high-quality assets and pursue value creation strategies. Two prominent examples are Jersey-incorporated NYSE-listed Janus Henderson Group plc’s take-private transaction with Trian and General Catalyst, completed in June 2026, and Permira’s acquisition of JTC plc, which has taken the Jersey-headquartered, LSE-listed professional services business private.

PE investment in professional services businesses has also been on the rise. Accountancy, advisory and legal services firms have attracted growing interest from sponsors seeking recurring-revenue platforms with strong client retention and exposure to private capital and financial services markets. Recent examples include the acquisition of Grant Thornton Channel Islands by the New Mountain Capital-backed Grant Thornton platform, Cinven’s investment in Grant Thornton UK and MML Capital’s acquisition of a 27% stake in Mourant.

Alongside these investment trends, sponsors have continued to explore a broader range of exit routes. While trade sales, secondary buyouts and continuation fund transactions remain important realisation mechanisms, the availability of IPO markets – particularly in the USA – has provided an additional route to liquidity for suitable portfolio companies.

PE has always performed best as an adaptive asset class, and the market therefore plays to the strengths of jurisdictions that can support sophisticated liquidity, financing and structuring solutions across changing cycles. Jersey’s flexibility has enabled it to remain relevant throughout changing market cycles. In a market where creativity and adaptability have become essential investment tools, those characteristics continue to be among the jurisdiction’s greatest strengths. The island remains a preferred domicile for fund structures, co-investment vehicles, continuation funds and acquisition platforms, benefiting from its well-established regulatory framework, political stability and familiarity among global sponsors and institutional investors.

The following sections look more closely at Jersey’s funds offering, corporate structuring toolkit and investment market.

Jersey funds

Jersey has long been a leading domicile for private capital funds – a trend that has continued into 2026. Data published in June 2025 showed that the number of regulated funds in Jersey stood at 608, with PE and venture capital assets continuing to represent a significant proportion of Jersey’s fund business. Despite a challenging global fundraising environment, Jersey has continued to demonstrate its resilience as a fund domicile for leading private capital sponsors and investors. 

Jersey continues to update and evolve its legislation to meet market appetites. The Jersey Private Fund (JPF) – Jersey’s fund vehicle for sophisticated investors – was first introduced in 2017 and has become Jersey’s fastest-growing fund “product”. At the end of Q1 2026, there were 828 registered JPFs, up from 763 JPFs as of 31 December 2025, demonstrating continued demand for Jersey fund structures among private capital managers. The continued growth of the JPF regime is particularly notable given the more challenging fundraising environment, suggesting that managers continue to place a premium on flexibility, speed to market and proportionate regulation. The JPF is a streamlined, lightly regulated fund structure aimed at professional investors that offers speed to market and flexibility for managers, making it particularly popular with PE, venture capital and other alternative strategy investors.

Following enhancements in 2025, a JPF may be offered to a defined “restricted circle” of professional or eligible investors with no hard numerical limit, benefits from an expanded definition of “professional investor” and offers a 24-hour authorisation timeline for regulatory approval. These features increase the flexibility and efficiency of JPFs and continue to enhance Jersey’s competitiveness as private capital markets continue to adapt to evolving market conditions.

Jersey further enhanced its funds offering in June 2026 by broadening the range of recognised stock exchanges and markets available to Jersey listed funds. The amendments aligned the listed fund regime with Jersey’s listed company framework and expanded access to international capital markets, reinforcing Jersey’s position as a flexible jurisdiction for private capital managers across a range of fundraising and investment structures.

Jersey corporate structures

Jersey continues to be a leading jurisdiction for PE investors to establish their acquisition and financing structures. PE investors typically acquire and hold assets through a layered holding stack, comprising:

• an acquisition vehicle “Bidco”, through which the target business is acquired;
• one or more intermediate financing vehicles “Midco”, through which acquisition financing is raised and deployed; and
• an ultimate holding company “Topco”, in which the PE sponsor and management hold equity of various classes.

The stack allows for flexibility in relation to financing and the return of capital, effective risk management, incentive alignment and, in some cases, advantageous tax treatment.

Jersey is a popular jurisdiction in which to incorporate these stacks. It offers a highly flexible yet familiar companies law that continues to be attractive to PE investors. The core statute, the Companies (Jersey) Law 1991 (CJL), is based on the English Companies Act 1985 and aligns closely with English company law in many key respects, offering a level of familiarity and comfort for investors who are used to working with English companies and legal principles. A raft of amendments to the CJL that came into force on 1 June 2026 have further enhanced Jersey companies’ flexibility and attractiveness.

That flexibility includes the way in which the CJL deals with maintenance of capital and distributions. Unlike English law, Jersey law does not require that companies have distributable reserves in order to make a distribution to shareholders. Rather, the requirement to make a distribution is that the directors of the company give a statement that the company is and will remain solvent for the 12-month period following the distribution. In other words, Jersey law looks to cash-flow solvency only, as opposed to balance-sheet solvency, making the process of approving distributions far less onerous while retaining a high level of creditor protection.

Jersey’s corporate offering is further enhanced by the availability of corporate entities not available in the UK. No-par value companies – ie, companies where the shares do not have a nominal (or “par”) value – are commonly used by PE investors as distributions may be made out of all capital accounts (Jersey par value companies can distribute share premium but not nominal capital by way of a “normal” distribution), and the process for creating or converting classes of shares is more straightforward.

This is complemented by Jersey’s well-established legal system, tax-neutral platform and widespread acceptance among international sponsors, lenders and advisers. A highly developed and efficient corporate services sector that supports the efficient establishment and administration of corporate structures is also an attraction.

The amendments to the CJL that came into force on 1 June 2026 have introduced changes to the capital rules for Jersey companies, including permitting par value companies to have unlimited authorised share capital, the introduction of a statutory framework allowing capital to be directly contributed without issuing additional shares, and greater flexibility around class rights. The reforms also remove the previous 30-member limit for private companies and streamline aspects of Jersey’s statutory merger regime. These changes simplify equity structuring, facilitate the implementation of management incentive arrangements, and provide sponsors with additional flexibility when capitalising and reorganising acquisition structures.

These characteristics are particularly valuable in the current environment, where sponsors increasingly require flexibility in relation to capital management, internal reorganisations and management incentive arrangements.

Jersey investments

Alongside being a preferred domicile for PE investors to base their capital and corporate structures, Jersey has been an attractive market for PE investment in and of itself. As a leading financial centre, Jersey is home to a deep ecosystem of corporate services, fund administration and professional services markets, which have attracted sustained interest from investors. These local investment themes also reflect the broader sponsor focus on resilient, recurring-revenue businesses identified above.

With respect to the market for corporate services, the growth of Jersey as a leading jurisdiction for funds and corporate entities has led to the rise of a large number of corporate service providers (CSPs), which provide incorporation, administration and regulatory services to the funds and companies based on the island. The growth of the sector has been closely linked to the continued growth of the global private capital industry over the past 50 years, and the demand it has generated for the fund and corporate structures discussed above.

For upwards of a decade, the CSP market in Jersey has seen high levels of investment from PE sponsors. The sector has attracted sustained investment from financial sponsors, partly reflecting the growth in demand generated by the private capital industry itself. Indeed, the PE industry appears to have found a way to “eat its own tail”: generating returns from demand that it has itself partly created. Attracted by the stable recurring revenues that CSPs are able to produce from a base of generally sticky clients (ie, other sponsors, among others), various leading PE houses have made investments into Jersey-based CSPs.

In 2016, Inflexion acquired Ocorian, a CSP on the island, which it later merged with Estera in 2020, another CSP it acquired from Bridgepoint. This trend has continued in recent years, with the Genstar Capital-backed Apex Group acquiring Sanne Group plc in August 2022, the General Atlantic- and Hg-backed Gen II Fund Services acquiring Crestbridge in April 2024, Warburg Pincus making an investment in Aztec Group in May 2025, and Jacobs Capital (formerly Telemos Capital) acquiring Highvern and merging it with the Nordic fund administrator Permian in January 2025, among a number of other transactions.

High levels of PE investment and bolt-on acquisitions have driven significant consolidation in the corporate services sector in Jersey, somewhat reducing the number of attractive investments available. For many sponsors, consolidation itself has become a key component of the investment thesis, with buy-and-build strategies used to achieve scale, expand service offerings, invest in technology platforms and enhance competitiveness in an increasingly global market. However, with the growth of the sector closely linked to the continued growth of the global private capital industry, and with that growth – despite the headwinds discussed – not showing any signs of slowing down, this is a trend that looks set to continue, and attractive investment opportunities remain despite ongoing consolidation within the sector.

Jersey is also home to a large professional services market, with a number of wealth management, tax advisory and accountancy businesses being established or having branches on the island. PE investors have shown increasing interest in accountancy firms in recent years, with an eye to rolling up the member firms that comprise their networks. In May 2024, New Mountain Capital completed a majority investment in Grant Thornton US. Following that transaction, the New Mountain-backed Grant Thornton multinational platform expanded through a series of transactions involving Grant Thornton member firms in multiple jurisdictions, including Grant Thornton Channel Islands. Meanwhile, Grant Thornton UK agreed to a majority investment by Cinven. The trend has also extended beyond accountancy firms. In August 2026, MML Capital acquired a 27% stake in Mourant, one of the offshore law firms with a presence in Jersey.

PE interest in the sector is not limited to the top end of the market either: the Institute of Chartered Accountants of England and Wales reported in a 2025 survey of UK mid-tier accountancy firms that 93% of independently owned firms had been approached by at least one PE house in the last three years, with 25% of firms indicating that they were likely to pursue PE investment within the next three years. Given the scale of the professional services market in Jersey, the recurring revenue characteristics of many businesses operating within it and the continuing appetite from financial sponsors for high-quality services platforms, the authors expect PE investment in the sector to remain a significant theme over the coming years.

As sponsors continue to focus on operational value creation, liquidity management and increasingly sophisticated structuring solutions, Jersey appears well placed to remain a key jurisdiction supporting private capital flows across investment cycles.

Conclusion

The PE market in 2026 is more selective, more operationally focused and more reliant on flexible structuring solutions than in previous cycles. Jersey’s combination of fund expertise, adaptable corporate law and established private capital ecosystem leaves it well placed to support sponsors as they deploy capital, manage assets and pursue liquidity in a more complex market environment.

Damilola Obafemi (senior associate) contributed to this article alongside the authors.