Exit Strategy
The planned method by which a PE fund sells or otherwise monetizes a portfolio investment to generate returns for its limited partners.
Common exit strategies include strategic sale to a corporate acquirer, secondary buyout (sale to another PE firm), initial public offering (IPO), recapitalization, or management buyout. The exit strategy is typically considered at the time of initial investment and shapes hold period, capital structure, and value creation planning.
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Frequently Asked Questions
What is an exit strategy in private equity?
An exit strategy is the planned method for a PE fund to sell a portfolio investment — through strategic sale, secondary buyout, IPO, recapitalization, or management buyout — to generate returns for limited partners.
When do PE firms plan their exit strategy?
Exit strategy is typically considered at the time of initial investment. It shapes the hold period, capital structure, and value creation plan for each portfolio company.
What is the most common PE exit route?
Strategic sales (to corporate acquirers) and secondary buyouts (to other PE firms) are the most common exit routes, together accounting for the majority of PE exits by value.
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