The best case scenario would still be Iron Galaxy, Imo. Followed by a newly formed studio from the creators of Killer Instinct 2013. I'd say things are a lot more complicated than "this studio makes a good fighting game so they'd be a good fit for Killer Instinct" Tbh, I would rather a Killer Instinct sequel be made by a Western studio rather than a Japanese one.
In the same way that I gave a side-eye to Microsoft handing over Phantom Dust to an American studio rather than the original creators who still existed, in Japan. Killer Instinct still has a Rare feeling and a Western style. Microsoft has some in XGSP still who worked on Killer Instinct 2013 and there's more that could be hired from the corpse of Double Helix or poach some Iron Galaxy employees.
It's only recently where Japanese developers are finally catching up to rollback netcode, Lol. I'd be worried they wouldn't nail the tone either, I'd also be worried that they'd be even less chance of Mick Gordon returning, they'd be less chance of folk who previously worked on KI 2013 from XGSP, Double Helix and Iron Galaxy returning to a KI sequel.
I think there's also a risk in choosing a well established studio that they may want to change it up too much and put their own spin on it when nobody wants that, Killer Instinct 2013 is too recent and fresh in people's minds and it was loved and sure KI 2013 was a reboot but the franchise was dead for 17 years and on a completely different platform so of course it had to be revamped gameplay wise.
Now? Most KI fans simply want KI 2013 but with next gen visuals, more characters and a deeper story. They don't want the art-style to change, they don't want the gameplay to change, they don't want the netcode to change, they don't want the OST to change which intertwines with the gameplay, most want Mick Gordon to return, etc.
It's a complicated one and I'm sure why it's taking so long to bring it back after losing Double Helix and Iron Galaxy. I'm not sure it's very appealing to say to a well established developer, like NetherRealm: "Here is Killer Instinct but we don't want you to change this and that and that and that, all we want is Killer Instinct but with better visuals, more characters and a deeper story" is it appealing if they can't put their own spin on it?
Which is why I'd even put another random indie studio passionate for the Killer Instinct IP above NetherRealm, Cyberconnect 2, Bandai Namco, etc. If I were to assume that every studio with be happy with these terms though then I would still say Iron Galaxy > New Studio with Former Double Helix/Iron Galaxy > NetherRealm > Bandai Namco > Cyberconnect2.
