The Blueprint for Private Markets Agility: Mastering the Build vs. Buy Balance Amid Technology Shifts

Today, we’re talking about tech stacks, private market fund managers’ favorite topic. That is, except for secondaries, AI adoption, and access to retail investors. Underlying all these conversations is a single unifying pressure: scalable growth. And not just scaling but doing so cleanly and efficiently without delays and bottlenecks caused by technology that does not play well with others. According to Private Funds CFO Insights Survey 2026, 63% of private fund CFOs said they anticipate growth in 2026.ⁱ Large firms with sprawling tech infrastructures have this constant pressure to be the best at what they're doing. They cannot afford to allow their systems to get outdated, so they repeatedly face the build vs. buy decision, often without a cohesive long-term blueprint.

In an environment characterized by rapid growth in increasing complexity, firms must play chess instead of checkers, always thinking 10 moves ahead. Such a long-term approach to technology infrastructure signals that it is not only a data management means-to-end but also a blueprint for agility. Technology is no longer a back-office utility; it’s a strategic foundation that either enables or constrains future optionality.

House hunting: Tech stack edition

The build vs. buy tech stack balancing act begins with thoughtful consideration of where you want your firm to be in 1 year, 5 years, 10 years — not just in considering AUM, but in product mix, deal structure, and investor demands. The highest-performing firms are proactive about their growth trajectory and meticulous in organizing their tech stacks. They construct nimble infrastructure so they can be agile. Think of this like buying a property.

Currently, a studio or one bedroom works fine, so you buy a plot of land with the capacity for a modest dwelling. But if you think about the growth or trajectory of your family, you might eventually want some dogs, you might have some kids, etc. When growth arrives, will you want to move to a new house and incur transaction costs? Or would it be better to be able to expand and build on your existing structure and land? The ability to do the latter needs to be considered when the land is purchased.

Private market technology works the same way. Managers must anticipate not only for growth but complexity; you need to have the infrastructure that enables it, in the easiest and least costly manner. Getting the infrastructure right means knowing what should be bought, what should be built, and how both choices preserve flexibility over time.

Pros, cons, and concerns when building

Fifteen years ago, a lot of firms built their own tech solutions. I saw a couple of such instances firsthand earlier in my career, including in my time at Citadel, which is well known for its technology-forward approach. It had a workforce ratio of approximately two tech people for every portfolio manager.

Building technology in-house is typically considered a viable long-term strategy when the platform itself becomes a strategic asset, particularly if the firm plans to monetize the finished product. For instance, a firm might build a world-class platform, commit capital and staff to its enhancement, and eventually monetize the resulting technology through a strategic transaction, as Citadel did when selling its Omnium platform to Northern Trust.ⁱⁱ This allowed the firm to generate value based on LP interest and the underlying technology. Firms that are able to build their own solutions can architect the platform to their unique business requirements and domain. Additionally, constructing your own solutions may save some money on vendor fees.

However, if an investment firm decides to build, it will need tech developers who are keeping up with market trends and best practices. And in a time when private market firms and hedge funds in particular are locked in a tussle for talent, this leads to a possible throwing bodies problem, in which firms run out to hire people in order to scale the business. As a result, most private market firms are going to have a hybrid approach (to some degree) to tech acquisition.

Pros, cons, and concerns when buying

Achieving the correct build vs. buy balance helps managers solve the throwing bodies problem. The more loans they do, the more people they recruit; the more AUM they raise, the more people they need. The more volume they do — with transactional nuances of receiving payments, receiving interest, receiving payments in kind (PIKs), etc. — the more people they need for reconciliation, accounting, and other investment operations.

Buying solutions accelerates time to market and reduces experimentation costs.ⁱⁱⁱ Firms often find that purchasing technology provides economies of scale and continuous enhancements, which is typically a more efficient option than constant internal development. In 2024, a majority firms surveyed by EY reported that current technology infrastructure requires frequent upgrades or manual intervention (55% in the front office, 54% in the middle office, and 60% in the back office).^iv

For firms shopping for infrastructure, they will need the budget and diligence in deciding between solution providers. In the cloud era, copious fintech companies have sprouted up, creating purpose-built end-to-end platforms that understand the context and nuances of capital markets. They strive to be on the cutting edge because their existence depends on it. Therefore, these solutions providers bear the research and development costs of staying current. However, as you can imagine, it becomes especially important to buy right, collaborating with vendors that build with flexibility in mind and espouse a partner mindset. Otherwise, firms may find it difficult to satisfy future needs easily.

Buy-build balance is about achieving agility and scalability

Building or buying is never a fully binary choice. The objective is not optimization for today, but optionality for tomorrow. Here are five essentials to prioritize in creating that agility:

1. Scalable, self-service architecture

The end goal of data and operational infrastructure is to be ready for anything, especially in this environment of volatility and uncertainty. Returning to my house construction dreams, if an issue befalls me that leaves me in a wheelchair for the next 6 months, I might find that my hallways are too thin for a wheelchair. Am I going to be able to expand the walls? Not without thinking about it in advance, asking myself what does it cost to put an extra inch or two in my hallway, just in case?

Data and operational platforms should be self-serviceable for the business-as-usual state, allowing the firm to scale without relying on a vendor for every minor adjustment. When buying, firms should guard against becoming dependent on a tech stack that requires constant vendor involvement, when trying to scale, for example, expanding ABF strategies or adding separately managed accounts. If I need to make my home wheelchair friendly, it would be nice to be able to do it DIY without paying a contractor or ripping and replacing.

2. Reduce the integration burden

A real benefit of buying tech infrastructure is gaining access to turnkey integrations with, ideally, a vendor who assumes responsibility for unifying data across many internal systems. Chief information officers and CTOs like vendors that are low maintenance and don't require their tech teams to move mountains to integrate. Integration with existing systems should be seamless and have a decreased cost of ownership. For example, buyers should ask prospective vendors to evaluate what the end-state architecture would look like and who will take responsibility for integrating and unifying data from 10- or 20-point solutions. They should ensure the vendor takes on the cost of implementing and standardizing the data rather than making the firm absorb that heavy lift. Vendor-agnostic architecture enhances scalability and adds simplicity.

3. Updates and upgrades the easy way

For any function a firm decides to outsource tech for, the vendor should manage change management and system upgrades in a non-disruptive way. SaaS platforms typically take care of upgrading the systems for users. After all, everyone has day jobs; firms do not need software solutions that create more work than they are already doing. If software requires constant attention, the question to ask is, is it truly scalable?

4. Readiness for AI & MCP

Private market managers are rushing to incorporate AI into their workflows, so legacy data infrastructure must be ready for the invasion of AI agents. The buy vs. build balance when it comes to agentic AI is a whole other blog post, although it comes with similar considerations in developer talent acquisition, cost, and integration capacity. Key prerequisites include preparing the foundations for scale, specifically cloud-based infrastructure, orchestration for multiagent systems, strong data governance with quality, lineage, and accessibility protocols.^v

Some larger firms with enough capital and data are building internal AI platforms; smaller or mid-size firms may rely on vendors. Regardless, they should be prioritizing model context protocol (MCP) servers, which are a rapidly rising innovation that opens the door to enterprise-wide AI adoption with orchestration for multiagent systems. They provide the interoperability, context, and workflow standardization needed to connect large language models (LLMs) to financial data, tools, and systems.

5. Unstructured data capabilities are non-negotiable

Today’s data and operational systems should include features like seamless processing of unstructured data to determine the correct transaction to book. The highly transactional nature of private credit produces more complicated accounting. Its transactions produce enormous volumes of unstructured data like PDFs, text, spreadsheets, emails, CSVs, etc. that only modernized data platforms can process and normalize.

Market pressures demand a private market tech stack that scales with your ambitions

When it comes to tech modernization, each firm will have their own unique concerns informing their decisions. Firms should plan their tech stacks the way you would plan a home you intended to expand, by anticipating future growth, including AUM expansion, increasing deal volume, data volume, and new vehicles and structures.

Nailing the build vs. buy balance is fundamental to preventing ballooning talent acquisition costs, future-proofing infrastructure for uncertainty, and enabling firms to thrive in complexity by prioritizing optionality and scalability.