Private Equity Forward Forum Takeaways – Maximizing Returns: Exit Strategies for Investors

At the 2024 Private Equity Forward Forum, Cooley partner Danielle Fortier moderated a panel that examined the strategies employed by private equity funds to maximize returns when exiting an investment. The panelists also shared insights on current market trends and their impact on transaction considerations for 2025 and beyond.

Session panelists included:

• Walker Brumskine – Partner, Bluestone Equity Partners
• Poya Daneshpour – Managing director, J.P. Morgan
• Dan Florian – Co-founder and managing partner, Palm Peak Capita
• Geordie Pierson – Partner, Falfurrias Capital Partners

Key takeaways

1. Preparing for an exit. The panelists stressed that it is never too early to start crafting an exit strategy and that sponsors should always be thinking about what steps to take to ensure the portfolio company is prepared for a sale. For example, the panelists noted that engaging with the sell-side bankers immediately following the original acquisition can assist with recognizing historical pitfalls and correcting them prior to the next sale. Additionally, portfolio companies and sponsors should be proactive before going to market, including working with their investment bankers to identify potential buyers and reaching out to these targeted bidders to better understand key value drivers.
2. Strategies for maximizing value in an auction process. While buyers have proceeded with caution over the last few quarters because of economic uncertainty and rising financing costs, the panelists stressed there are still significant opportunities to generate value on an exit, particularly through a competitive auction process. One strategy the panelists shared is analyzing the asset from a buyer’s perspective, which can help the seller articulate the investment thesis. The panelists highlighted the power of fully understanding how a buyer can create value during the investment’s lifespan to position the asset to sell for a premium. Additionally, due to current market dynamics, processes have become more intimate. Thus, the panelists noted that cultivating relationships with potential buyers early in the process and creating a feeling that a buyer is the best fit for a transaction are often precursors for a bidder preempting the process and generating higher returns.
3. Market conditions and forecast. Although the buyout market has slowed in recent years, the panelists remain optimistic that activity will continue to increase in 2025 and beyond. In particular, the panelists noted they expect to see a continued rise in activity from sovereign wealth funds and retail investors and increasing use of continuation vehicles for prime assets as parties continue to find innovative ways to maximize value across the industry.

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