UNCHARTED TERRITORY
Private markets learn to forecast instability
rates and inflation dominate forecasting calculations
Lack of relatable precedent is muddying the waters
Long seen as a safe harbour from the instability of the public markets, even private capital firms are now finding their fortunes heavily influenced by macroeconomic events – with supply chain instability, inflation and AI disruption spilling over from short, sharp shocks to protracted realities. This makes macro indicators an increasingly important part of GPs’ cashflow analysis. In Private Equity Wire®’s Q2 2026 survey, 91% of respondents said that they used them for their forecasting.
As the post-covid interest rate correction continues to impact exit strategies, monetary conditions are a central part of that approach. Interest rates and credit spreads were cited by 81% as a critical component of forecasting. With supply chain disruption raising materials costs at a moment’s notice, 70% of respondents reported inflation as being one of the most critical metrics. In the real economy, GDP growth forecasts were selected by 56%.
Still, private markets are not seeing the valuation fluctuations that are present for listed stocks. Even so, performance in the public markets is still a key forecasting consideration for 37% of respondents.
ADAPTING TO THE UNKNOWN
With the rate of change and volatility, a standard topdown forecast for the whole portfolio can quickly become inaccurate. Instead, firms are looking for flexibility – that is fresh data, which can adjust in real time amid change. They are also under pressure to be more transparent. Private wealth investors, now taking up a greater share of LP commitments, are demanding the same access to information that they are accustomed to in the public markets.
With prudent manager selection now a prerequisite to accessing outperformance, firms favour a granular approach to forecasting, to provide LPs with the detail they need to make investment decisions. The deal/asset level was selected by 35% as focal point for cashflow forecasts, followed by 30% at the fund level. These were favoured over a consistent methodology across all levels (19%) and forecasts at the aggregated portfolio level (16%).
Marcus Pietz, Head of Analytics, AssetMetrix, says:
“In our view, the preference for granular forecasts does not have to come at the cost of methodological consistency. The 19% who prioritise consistency across levels are right to want it, but that need not mean sacrificing deal- or fundlevel detail. At AssetMetrix, we have found that the most effective forecasting architectures begin at the individual investment level – e.g. incorporating asset-class- and region-specific parameters – while aggregating results upward into a coherent portfolio view.”
“This avoids the trade-off implied by a purely top-down or bottom-up choice: Investors benefit from the detail they need at each level, underpinned by a single, integrated model framework rather than a patchwork of disconnected tools.”
Note: Multiple response question
Figure 1 Indicators used for forecasting private capital cashflows
THE LOGISTICAL HURDLE
For GPs, this conflation of factors poses a significant operational challenge. Investor demands were cited by 53% as one of their biggest forecasting pain points. A more granular approach goes some way to keeping information fresh, and meeting the demands of LPs, but investors have little experience to draw on for more recent dislocations.
Pietz says: “We believe that while data scarcity is an inherent feature of private markets, it need not be a barrier to robust forecasting.”
“Models that combine private fund cash flow histories with macroeconomic variables can bridge the gap left by infrequent and lagged reporting - particularly as private wealth investors expect a cadence closer to public markets.”
Aggregated portfolio level
All levels with a consistent methodology
A global pandemic, surging tariffs and the closure of major international waterways all have little historical precedent, limiting the ability to make useful forecasts.
A lack of relatable precedent was cited by 44% as one of their biggest forecasting challenges, while 35% chose data opacity and fragmentation. Information lags were selected by 35%, a sign that firms are grappling with the challenge of providing more frequent disclosures on fund performance for their private wealth investors.
With reporting typically done on a quarterly basis, firms are increasingly finding themselves playing catch up to provide the level of transparency which is demanded by this new investor base.
“What matters most is that such models are rigorously and continuously backtested against actual outcomes –a discipline that, over time, compounds into demonstrably reliable forecast quality.”
“Our experience since 2015 suggests that in an environment where historical precedent is thin, a long and transparent track record may be the strongest foundation for LP trust.”
Figure 2 Biggest forecasting pain points
Figure 3 Areas where cashflow forecasts most required