In the private equity world, finding an attractive asset,
acquiring it at the right price, and successfully executing a value
creation plan post-acquisition are all critical components to
success, but the true test comes in realizing the value and returns
upon exit.
The current market has become increasingly difficult for
successfully exiting investments and realizing internal
rate-of-return targets—let alone exceeding
them. The same economic and competitive factors that
make finding attractive deals tougher are now making exits more
complex than ever.
Portfolio companies being prepared for sale today were typically
acquired in markets with very different economic outlooks from
today's. It was a market with readily available and cheap
capital. Buyers today not only have to pay more for debt; they also
find fewer lenders because credit investors have tightened their
standards by requiring buyers to put up more equity before deals
can happen. According to PitchBook,
