Latham’s Texas Private Funds Breakfast Series: Spring Market Trends and Strategies

This spring, Latham’s Investment Funds and M&A and Private Equity practices led a discussion of current market trends and potential strategies for private equity firms in the latest installment of the Texas Private Funds Breakfast Series. The quarterly series is designed to unite senior members of leading private capital firms and financial sponsors for networking and market-focused insights.

The discussion, led by partners Chris Heasley, Max Klupchak, Mark Proctor, Amy Rigdon, John Stavinoha, and Matthew Wynne, explored the macroeconomic landscape for private equity, opportunities using rated notes investments, and trends in secondary markets and the acquisitions and divestitures (A&D) market.

Key Takeaways

• Uncertainty Persists, but Opportunities Remain: Geopolitical volatility is keeping interest rates and market volatility high. Private equity is now a $3 trillion-plus market that is facing its first real stress tests, and AI and data center infrastructure continues to drive major deals. Valuation gaps (public and private or US vs. Europe) keep take‑privates, carve-outs, and cross‑border deals attractive.
• Rated Notes Offer Regulatory Capital Relief: Insurance companies and other potential investors subject to risk-based capital (RBC) requirements are interested in alternative investment structures like rated notes and collateralized fund obligations (CFOs) as a means to invest more efficiently in certain asset classes. We discussed these structures and key considerations for their use as a capital-raising tool.
• Secondary Market Reaches New High: Secondary market transaction volume continues to grow, surpassing $200 billion for the first time in 2025, and we expect that trend to continue in 2026. In the general partner (GP)-led markets, continuation vehicles have evolved to become an established part of sponsors’ liquidity playbook alongside more traditional exit pathways, and GP-led activity continues to expand beyond core private equity secondaries, with growing traction in private credit. On the limited partner (LP) side, larger portfolios account for an increasing share of transaction volume, as evergreen vehicles have brought additional capital into the market and more LPs are embracing portfolio optimization as a core strategy.
• Upstream Oil and Gas A&D: The session provided an overview of the A&D market for upstream oil and gas, looking at the mix of buyers and market dynamics in the post-mega merger era as well as structures of and legal focus on the types of deals in the A&D market. Capital structure is changing who wins deals and what sells: ABS-backed buyers with higher advance rates are paying up for proved developed producing (PDP)-heavy, low-decline packages, pulling more mature cash-flowing assets into market and pressuring bidders who are constrained by reserve-based lending (RBL). At the same time, post-mega merger cleanup is keeping supply steady as large exploration and production (E&P) companies shed non-core and sub-scale positions to de-lever and simplify portfolios, while scarce top-tier Permian Basin inventory is pushing deal flow toward gas-weighted basins tied to liquefied natural gas (LNG) growth and rising power and AI demand.

If you have questions, please contact a member of our Investment Funds or M&A and Private Equity practices or the Latham lawyer with whom you normally consult. Learn more about the Texas Private Funds Breakfast Series and upcoming topics here.