How private equity-owned businesses can prepare for an exit

NextWave Private Equity

Charles Honnywill, EY UK&I Divestiture Advisory Services Leader, discusses specific actions PE fund managers can take to prepare for a successful, well-timed exit.

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It can be difficult for PE fund managers to have a comprehensive outside-in perspective when considering the sale of a portfolio company due to what Charles calls a “baggage of ownership”: the inability of a fund manager to adopt the mindset of a likely buyer due to their proximity to an investment. As a result, PE funds historically have not always planned as methodically around the exit of a business as they do upon its investment.

In this episode, Charles explains this challenge, articulates the benefits of an IPO vs. outright sale and recommends specific actions PE fund managers can take to prepare for a successful, well-timed exit.

Key takeaways:

• While IPO remains the most popular exit route, other options include an outright sale to a strategic buyer or PE fund
• PE funds are starting to think more methodically around exit, but there is a trend toward greater preparedness
• The top five exit considerations for a PE-backed company include:
  1. Create a plan 18 months prior to expected sale
  2. Consider the equity story of potential buyers
  3. Make necessary changes to your management team
  4. Consider the timetables of the market and likely buyers
  5. Consider your sale from a financial, operational, commercial, tax/legal and regulatory perspective