The deal market may be thawing, but exits remain stalled. After years of elevated multiples and easy leverage, PE firms are navigating a fundamental shift: operational value creation is no longer a differentiator — it is the baseline.
Key Themes
Global exit value rose 34% YoY to $468B; exits up 22% to 1,470 — but recovery is uneven. Middle market lagging large-cap recovery significantly.
Investment rate fell to 18% over 12 months; LPs growing anxious about prolonged capital idleness. The pressure to deploy is real — but so is the pressure to deploy wisely.
Record rebound in 2024 deal value; 5,000+ unsold PE-backed companies still in portfolios, many 5+ years held. The overhang is massive — and buyers know it.
Focus on exit equity, not just EBITDA; frontload talent; invest in tech and data infrastructure; align early with sponsors on the full value creation plan.
Speed, clarity, and AI training are now critical CFO competencies. Simplify finance processes for faster decision-making. The CFO who can compress decision cycles creates compounding organizational advantage.
Three emerging archetypes: Expander, Catalyst, and Protector — each with distinct strategic orientations. The profile that fits a carve-out looks nothing like the profile that fits an organic growth story.
The Execution Shift
From 2010 to 2021, roughly two-thirds of PE value creation came from leverage and multiple expansion — factors outside any manager's control. That window is closing. The margin between top- and bottom-quartile funds now tracks directly to operational execution quality.
PE firms are responding by investing earlier in CFO talent, building operating partner capacity, and demanding more rigorous VCP discipline from day one of ownership. The companies that built execution infrastructure during the slow market are the ones that will clear cleanly when the exit market opens.