Predictions by an investment funds lawyer as to the timing and severity of an economic downturn seem ill advised, as the views of experts both actual and self-appointed on the topic seem to shift weekly. Nevertheless, there are reasons for managers of private funds to take steps to prepare for a potentially significant economic shift. Even in the absence of an actual recession, private fund managers can actively take steps now to prepare for adverse economic conditions with varying degrees of severity and, in doing so, can also potentially benefit from a related ability to address market volatility and the impact of shifting market forces on a fund’s private portfolio companies, publicly traded securities and other holdings. It is worth noting that these issues are important for both investment advisers in the U.S., as well as those outside the U.S. but with enough assets under management attributable to U.S. investors to require either registration under the Investment Advisers Act of 1940 or status as an exempt reporting adviser. In a guest article, Paul Hastings partners Ira P. Kustin and Alex Cota focus on the legal, regulatory and practical issues that managers can address now rather than presenting any commentary on investment strategies to be implemented under those conditions, considering the numerous potential pitfalls – and potentially as many opportunities – for private funds posed by an economic slowdown. For additional insights from Kustin, see our three-part series on suspending withdrawal or redemption requests: “The 2008 Crisis Versus the 2020 Pandemic” (May 21, 2020); “Key Steps in the Process” (May 28, 2020); and “When and How to Lift the Suspension” (Jun. 4, 2020).