Private equity exit

What a private equity exit has to decide

The exit is a choice of buyer and of story. A strategic buyer is paying for fit with its own company. A sponsor buyer is paying for a second hold. A recap returns some capital and keeps the risk. A continuation vehicle asks existing investors to stay. Private equity exit work is picking which of those you can actually support with the file you have. The private equity deal lifecycle does not end because a calendar says the hold is over. It ends when the evidence can carry a process.

The memo should be easy to audit. Sourcing said why this company fit. Valuation set the entry case. The growth plan named the moves. Value creation showed which moves landed. Portfolio management recorded what was late. The exit section should read like the last chapter of that file. If it reads like a new pitch, buyers will assume the middle of the private equity deal process was thin.

Timing is a fund question as much as a company question. A company that is ready and a fund that still needs the asset for the stated strategy can wait. A fund that is out of time and a company that is not ready will take a discount or run a process it should not run. Say which one you are in.

Worked sequence on the Exit and Sell-Side Planner

Start from the latest portfolio mark, not from closing. List the paths you could run. For each path, write the one fact from the bridge that buyer would pay for, and the one fact that buyer would attack. Drop any path whose attack you cannot answer. Draft the memo in the order of the private equity deal lifecycle so the reader can see the chain. Then read the returns against the LBO case without adding a new multiple by hand. If you need a richer exit multiple to make the original memo true, you do not have an exit yet. You have a wish.

Hand the decision back if it fails. That is allowed. A private equity exit page that only celebrates sales teaches the wrong habit. Sending the company back to portfolio management with a written gap is a complete practice loop.

• Deal lifecycle hub
• Private equity portfolio management
• LBO Returns Sandbox

What a premature process costs

Running a sale before the bridge is checkable burns management time and teaches the market that the asset is available. You may not get a second clean look. The private equity deal cycle is patient in the middle so it can be specific at the end. Practice that patience on the Exit desk by rejecting a path on purpose.

When you are ready for the numbers around an exit case, use the LBO Returns Sandbox to see how hold length and exit assumptions move MOIC and IRR. Do not treat that sandbox as an exit strategy. It is the arithmetic. This page is the decision.

Close the private equity deal lifecycle by filing the memo in the same order as the desks. If a section has nothing new since entry, say so. Buyers trust a short truth more than a long recap. A private equity exit that can point at the portfolio review is ready for a process. One that cannot should wait.