Why Asset Owners Need Their Own Private Markets Governance Expertise

• Inadequate owner-side scrutiny can translate directly into unfavorable pricing or value transferred to sponsors and other counterparties.
• An LP may possess information, consent, voting, or challenge rights but lack ready access to the valuation, legal, and restructuring expertise needed to use them before a transaction closes.
• Standing coalitions or shared governance infrastructure could make scrutiny economically viable.

Institutional investors supply much of the capital invested in private markets. Sovereign wealth funds, public pension plans, insurers, and endowments support an ecosystem that includes general partners, banks, law firms, consultants, valuation advisers, and restructuring specialists.

Yet these asset owners rarely shape the professional ecosystem governing how their capital is deployed.

Private equity sponsors hire the same law firms across transactions, retain consultants portfolio after portfolio, and build long-term relationships with valuation specialists, restructuring advisers, and operating partners throughout an investment’s lifecycle. In other words, as repeat purchasers, they generate recurring demand for specialized expertise. As a result, managers—not owners—shape the market for governance expertise.

Weak recurring demand by asset owners does not merely leave a professional-services gap; it can reduce owners’ bargaining power and weaken price discovery and valuation assumptions. The consequences become most visible only after something has already gone wrong. By the time continuation funds, restructurings, and other conflicted transactions are in play – when owners must evaluate valuations, processes, and competing interests under tight deadlines – assembling the necessary expertise may be too late. 

We often assume influence follows capital. In practice, influence follows recurring demand.

Every market responds to its most reliable customers. Professional firms invest where they expect long-term work, and then hire specialists, develop expertise, and create new service lines for clients who return year after year.

The same principle applies to governance.

Asset owners, by contrast, typically purchase governance capability only episodically—during disputes, restructurings, or litigation. They become occasional customers in a market increasingly built around repeat buyers.

I call this governance purchasing power: the ability to shape the development of professional capability through sustained, recurring demand.

As I argued in a previous Enterprising Investor article,institutional investors have often treated the exercise of legal and governance rights as an afterthought to the investment function. The deeper problem is that the market has little reason to build sophisticated ownership capability for a customer who only appears during a crisis.

A recent continuation-fund dispute illustrates the economics.

In late 2025, the Abu Dhabi Investment Council (ADIC), part of the approximately $300 billion Mubadala investment group, challenged a continuation-fund transaction involving affiliates of Energy & Minerals Group (EMG) in the Delaware Court of Chancery.

Among the complaints were “a lack of adequate notice and information provided to LPAC [limited partner advisory committee] members before they were asked to vote on the transaction.” These were allegations rather than judicial findings, and the arbitrator ultimately ruled in favor of the sponsor. Yet the litigation revealed something important.

After the transaction was delayed, Kimmeridge reportedly submitted a $6 billion cash offer, compared with the approximately $5.5 billion valuation implied by the continuation fund. A second bidder also reportedly entered at a premium. Although the proposals involved different transaction structures and did not establish that EMG’s valuation was improper, their emergence raised questions about whether outside demand had been fully tested.

ADIC, one of the most resourced institutional investors in the world, bore the cost of challenging the transaction; during the resulting delay, competing indications of value surfaced, yet ADIC lost the ruling and captured none of whatever benefit the additional price discovery produced.

The deal closed at the original number.

Whether the sponsor’s valuation ultimately proves correct is almost beside the point. A single owner bore the full cost of scrutiny while whatever informational benefit emerged was shared across the investor base, leaving the challenger with little prospect of capturing the return on its intervention. That is a losing position by construction. The lesson is not to litigate harder. It is to never be in that position in the first place.

The more efficient model is preventive rather than reactive.

Instead of assembling expertise transaction by transaction, owners could maintain standing relationships with independent valuation, restructuring, and fiduciary specialists before conflicts emerge.

When sponsors know in advance that a continuation fund or conflicted restructuring will be reviewed by informed counterparties, the most likely consequence is not more litigation but fewer transactions structured in ways likely to invite challenge.

The greatest value of ownership capability may never appear in litigation statistics. It appears in transactions that are never attempted. Governance capability resembles insurance. A premium is not wasted because the house did not burn down; its value lies in protecting against potentially adverse outcomes.

The obvious objection is that no single owner wants to fund capability whose benefits are shared across the rest of the market. That collective-action problem is real—and it points toward the solution: a standing coalition of large, diversified owners with shared access to governance expertise as permanent infrastructure.

The important distinction is that such a coalition is not primarily about cost-sharing. Its purpose is demand concentration.

Scattered, episodic demand cannot create new markets. Standing, recurring demand can.

Cost-sharing splits the bill for capability that already exists. Demand concentration shapes which capabilities come to exist at all

The proxy-advisory industry offers an existing precedent: It emerged because institutional investors generated sufficient recurring demand for independent voting expertise.

The argument, then, is not that asset owners should simply spend more. It is that they should become repeat purchasers of governance capability.

Supplying capital does not by itself make an institution an effective owner. Ownership also requires sustained expertise to exercise rights, scrutinize valuations, and respond when interests diverge.

Asset owners should maintain standing access to independent governance capability, potentially through a coalition that concentrates their purchasing power.

That capability should be treated as part of fiduciary oversight, with the same rigor applied to manager selection and portfolio construction.

Private markets have spent decades evolving around repeat purchasers on the deployment side; the next stage may begin when ownership becomes one too.

Disclosure: Baraa Shaheen is Founder and Managing Partner of Balwara Limited and Founding Convener of the Universal Owners Council. His work through these organizations includes research and development of owner-side governance infrastructure of the kind discussed in this article. He has no financial interest in or relationship with any party to the transaction discussed.