Exit Planning in 2025: Tactics to Boost Exit Values

VALUE CREATION IN 2025

What role will strategic pricing play in value creation in 2025, and how is it different from prior years?

The past three years:

• Significant inflation in the past three years drove pricing and volume-focused growth plans for many portfolio companies.
• The reliance on transactional pricing for revenue growth diminished in 2024 as value creation became paramount and inflation-driven price increases proved unsustainable.
• Growth plans became increasingly difficult to sustain with unexpectedly longer hold periods and risk-averse buyers.
• Many companies transitioned to more nuanced defensive pricing strategies as well as late-hold initiatives such as sales pipeline growth, product innovation, and growth of the install base.

In 2025:

• With skepticism surrounding pricing as a growth driver, businesses need to develop durable pricing strategies that adapt to diverse market conditions, preserving volume and safeguarding profitability.
• Anticipated macroeconomic shifts, including labor market fluctuations, supply chain instability, and potential inflationary volatility,?present opportunities for surgical pricing.
• Deal activity continues to surge, with businesses focused on going to market.

"Exit value is headed for its highest total since 2018, or $396 billion, but with 66 fewer deals. This reflects the trend we have observed of PE sellers bringing their highest-quality assets to market to secure favorable exits while holding off on the rest of their portfolios during a strained market period." - PitchBook

SUSTAINABLE VALUE CREATION

How can a structured, cyclical approach to value creation contribute to stronger exit plans and sustainable outcomes?

It's critical that private equity firms invest in strong, agile data capabilities, embedded, sustainable mechanisms for driving growth throughout the hold period, and robust opportunity roadmaps to provide an ongoing blueprint for value creation priorities and execution plans.

KEY EXIT PLANNING CHALLENGES

What specific obstacles are private equity firms facing that hinder successful exit plans and outcomes? What actions can be taken to meet objectives?

"Too often, we spend the last few months of a hold period getting the data organized, and realize, we could have done so much more to drive value." - Operating Partner, Mid-Cap Private Equity Firm

BOOSTING EXIT VALUES IN 2025

How can private equity approach exit planning to drive successful outcomes?

Typical exit checklists fall short in today’s climate because they aren’t robust enough to adequately navigate market fluctuations and the misalignment between buyers and sellers. In addition, many traditional approaches to exit planning result in missed growth opportunities because they are structured as one-time, static playbooks leveraged late in the hold cycle.

Private equity firms should shift their mindset to consider exit planning as an extension of the value creation roadmap. This looks like a formalized, proactive exit planning strategy that offers an agile framework to uncover and realize opportunity and mitigate risks throughout the hold period, supported by foundational capabilities and a clear roadmap for the future.

In our recent white paper, Exit Planning in the New Reality: A Structured Approach to Maximize Value, we outline several components to help firms achieve better exit outcomes:

• Implement a repeatable playbook of continuous value-creation improvement versus a one-time exit planning initiative.
• Adopt the playbook early in the investment lifecycle, alongside the investment thesis and value creation plan.
• Stand-up an annual review process that enables critical adjustments to the value creation plan.
• Thoroughly invest in foundational capabilities such as quality data, granular systems of data analysis, and strong mechanisms of accountability.

ACT NOW

1. Advance Data Capabilities - Invest early and intentionally in clean, structured, and centralized data. Don't underestimate the power of quality data to identify, measure, optimize, and sustain value creation.
2. Grow Current Customers - Micro-segmentation rooted in quality data enables a granular view of customer behavior and patterns. Use this to craft data-driven up-and cross-sell strategies that arm sales with high-likelihood revenue growth opportunities.
3. Deploy Commercial Toolkits - Focus on supporting pipeline momentum, generating top of funnel opportunities and demonstrating predictability through tools, resources, process and metrics.
4. Assess Exit Readiness - Confirm the growth story of business, demonstrate initiatives' contribution to growth through data, assess commercial capabilities, identify risks to be addressed, and present clear view of what's next on roadmap.