Navigating the new normal – maximising business resilience in a challenging market
Businesses face multiple pressures in today’s complex global environment. The smartest, however, are turning challenge into competitive advantage. But how are agile firms both finding their footing, and thriving, amidst today’s market turmoil?
In 2025, businesses across the globe continue to face pressure on multiple fronts. While inflation has eased from its 2022–2023 peaks, it remains uneven across regions. The U.S. is experiencing renewed inflationary pressure due to trade policy shifts, while Europe and Asia are seeing more consistent disinflation. Interest rates, though expected to decline gradually, remain elevated, increasing the cost of capital and dampening investment appetite.
According to EY’s midyear global outlook, global GDP growth is projected to slow to 3.0% in 2025, down from 3.2% in 2024. Developed markets like the U.S. and eurozone are expected to grow at 1.5% and 1.0%, respectively, reflecting cautious sentiment and tighter financial conditions. These macroeconomic shifts are particularly felt in capital markets, where volatility and prolonged uncertainty have tempered fundraising and deal activity.
Macro pressure, micro implications
Private capital markets are undergoing structural change. Fundraising cycles are lengthening, exit timelines are stretching, and investor expectations are evolving. In today’s environment, investors are demanding more than just returns — they expect transparency, operational excellence, and a clear path to liquidity.
According to McKinsey’s 2025 Global Private Markets Report, limited partners (LPs) are shifting from passive capital allocators to more active participants, increasingly investing directly in general partners (GPs) and favouring fund structures that offer greater flexibility, such as continuation vehicles and evergreen funds. As reported by McKinsey, notably, 2.5 times as many LPs now rank distributions to paid-in capital (DPI) as their most critical performance metric compared to three years ago.
This shift reflects a broader recalibration of priorities. Investors are placing heightened emphasis on value creation through operational transformation rather than financial engineering. As PwC notes, “Funds are becoming more disciplined in looking at operational transformations with enough upside to justify hefty valuations”. This is especially relevant in a market where high valuations persist and exit opportunities remain constrained.
Moreover, LPs are increasingly seeking exposure to differentiated strategies and niche sectors, while also expecting GPs to demonstrate resilience in the face of macroeconomic volatility, geopolitical uncertainty, and technological disruption. As McKinsey highlights in their report, “The spread between better-differentiated and better-performing funds and less-differentiated and worse-performing funds may widen”.
Corporates and investment firms alike are being challenged to do more with less, while maintaining full compliance and transparency. The ability to adapt quickly and strategically is becoming a key differentiator.
From risk to resilience
Despite these headwinds, many businesses are responding with agility. Firms are diversifying supply chains, re-examining operational models, and strengthening compliance frameworks. Organisations operating across jurisdictions are managing increasingly complex issues — from tariffs and sanctions to cross-border tax obligations —often with lean teams.
Keeping pace with regulatory complexity
Regulatory requirements continue to grow in scope and sophistication. From the EU’s Corporate Sustainability Reporting Directive (CSRD) to evolving AML and beneficial ownership rules, businesses are facing a more demanding compliance landscape. According to EY’s 2025 report “Risk management’s strategic opportunity in a time of turbulence,” regulatory uncertainty is increasingly viewed as a strategic risk — particularly for firms operating across borders. The report notes that 29% of Chief Risk Officers now cite regulatory and compliance risk as a top concern, up from 22% the previous year. Firms that treat compliance as a strategic priority—not just a legal obligation—are better positioned to gain investor trust and sustain momentum in capital raising.
Capital efficiency and cost discipline
The rising cost of capital and increased scrutiny on management fees have put private capital managers under pressure to operate leaner. Outsourcing non-core functions —such as accounting, fund administration, and regulatory reporting — is becoming a strategic lever for scalability.
This is not just about cost-cutting. It’s about resilience. Firms that can scale operations up or down without compromising compliance or investor confidence gain a competitive edge. By outsourcing specialised, resource-intensive tasks, they access best-in-class expertise while keeping internal focus on strategic value creation.
The future of resilience
The path ahead will not be linear. Market volatility is likely to persist. Regulatory expectations will continue to rise. Geopolitical events will remain a source of disruption. But within these challenges lies an opportunity to reinvent business models — making them stronger and more adaptable.
Resilient firms are aligning leadership with operations, global strategy with local execution, and business goals with compliance frameworks. They’re also recognising the value of end-to-end service ecosystems — supporting asset managers and their portfolio companies across jurisdictions, functions, and life cycles.
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TMF Group, founded amidst geopolitical shifts, exemplifies resilience. With a comprehensive suite of services—including accounting, tax, payroll, fund administration, and compliance—we support businesses in navigating complex global landscapes and thriving in a world of constant change.
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