Finally, they should also prepare to disclose and actively manage unpleasant surprises and give forthright answers to buyers’ difficult questions.
This process may include the somewhat counterintuitive step of leaving some value-creation opportunities on the table for potential buyers to execute. Second, to demonstrate further potential to possible new owners, they should instruct management to focus on value-adding performance improvements that continue to create value while preparing for the exit and post-transition stages. First, they should perform a readiness scan 18 months before the intended time of exit. Together, these challenges make the exit process trickier to successfully execute and lead to a widening spread between strong and weak exits.ĭespite the complicated environment, PE investors can overcome these obstacles and achieve exit excellence through three distinct actions. And many owners struggle to create value past the initial one to three years of the holding period, during which the primary value levers are pulled. Rapid technological change makes it tough for buyers and sellers to reach a shared understanding of risks as well as potential sources of value. Buyers are more sophisticated-and more demanding-than ever. Moreover, regardless of the exit strategy, and despite rising multiples, exits are becoming more challenging.
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