Governance-by-Design for Private Markets: from Funds to Platforms

Key Points

• For the largest private markets managers, platformisation is already the operating reality – even though governance and operating models still vary materially across the industry.
• Platformisation has matured faster than the governance architecture around it. The result is a governance paradox: platforms exercise management authority across legally separate vehicles whose fiduciary obligations they shape at manager level but which authority remains contractually constituted at vehicle level.
• Three widely used mechanisms – loan management extensions, evergreen and semi-liquid structures and General Partner-led continuation vehicles – illustrate how this paradox impacts governance, decision-making, and risk transmission.
• Governance-by-design is the institutional architecture response to this paradox: a principles-based diagnostic framework embedding decision authority, fiduciary alignment and oversight ex ante – an increasingly important necessity for platform models as complexity, regulatory scrutiny and heterogeneous capital obligations intensify.

In this article, the authors diagnose a governance paradox in private markets: as operating models shift from fund-by-fund deployment to platform-level management, decision-making authority is centralised while fiduciary obligations remain fragmented across legally separate vehicles. Governance frameworks designed for episodic, vehicle-level decisions are structurally exposed to ad hoc retrofits that may not reliably balance competing investor interests.