PE Playbook 2025: (Still) Ready For Exit

The outlook for private equity exits remains as unpredictable as ever. While late 2024 brought renewed optimism—driven by expectations of interest rate cuts, narrowing valuation gaps, and a rebound in M&A—market turbulence in early 2025 has thrown fresh challenges into the mix. Persistent inflation concerns, election-year volatility, and geopolitical instability have left many investors hesitant to pull the trigger on deals, keeping exits sluggish.

Yet for PE-backed CEOs, preparation remains key. That was the consensus at Chief Executive’s 5th Annual PE-backed Leadership Summit in New York City, where industry leaders discussed strategies for thriving amid uncertainty. Their advice? Align with sponsors, stay laser-focused on value creation, and be ready to move when the window for exits reopens. Some takeaways.

Align on vision. As Mark Fields, former CEO of Ford Motor and current senior adviser for TPG Capital, put it: “Be very clear and up front with your investor about the value creation plan,” including the specific levers for value creation, whether that’s operational improvements, digital transformation, ESG initiatives, etc., as well as how that investor expects to make money. “It’s really important to have a clear understanding of, ‘What is my mandate?’”

Fields also recommended boning up on the kinds of questions investors are asking and how they ask them. “Think about sprinkling that in as you are either reporting out on the business or looking at making innovative investments, perhaps through new adjacencies.” Those kinds of proactive answers will communicate to investors that “this CEO not only knows how to run a business, but they know how to create value—and that’s music to a PE investor’s ears.”

Pascal Yammine, CEO of PE-backed Zilliant, recommended focusing on alignment. “We had a lot of changes in our investor team, which made it extra challenging. In one of our first meetings with [our investor], we had ideas of how we were going to talk about our goals, where we’re at, where do we need to be? In the end, I just created one slide, two boxes: ‘Here are your choices. We can be this, or we can be that. Which is your focus from an investment perspective?’ That made it very simple. And he was clear—he said, ‘I want that. That’s what we focus on.’ So every decision from there became reminding him, ‘This is the decision we chose, here’s the reason, and here’s what comes with it.’”

Be a vigilant leader. Paul Aversano, managing director of Alvarez & Marsal advisers, noted that a common mistake is not replacing underperforming management when the writing is on the wall. “When you talk to our PE clients, their greatest mistake or regret, if the deal goes sideways, is they didn’t change out management quickly enough,” he said.

Another error: Taking your eye off the ball when things are going well. “There’s a level of complacency that starts to creep in,” Aversano said. “I force myself and my team to be extra vigilant when times are good. Be prepared for the unexpected.”

Diversify value levers. Aversano noted that more than 50 percent of value creation over the past decade came from multiple expansion rather than operational improvements—but that traditional PE model is becoming less reliable. “We are seeing clients looking for ways to add value where historically they didn’t look,” including ESG and digital transformation, he said. “Financial engineering has gone by the wayside, and now firms are looking to create value to overcome that multiple contraction and to overcome business performance in general, inflationary costs and so on.”

That said, make sure your focus is appropriate for the cycle you’re in, said Mark Williams, CEO of Magna Legal Services. “If you’re heading into a sale, you’re focused on boosting EBITDA, watching costs and shining up the business for sale—you’re not going to start new initiatives. But if you’re fresh into a new investment, you invest in growth, start new initiatives and build for the future. You need to focus the team in a different way depending on where you are in that life cycle.”

Be ready to deal. As the PE industry braces for even more upheaval, preparation is still key. Elizabeth Broomfield, managing partner for middle-market PE firm Aquitaine Capital, and Georgeta Precup, operating partner with Albaron Partners, both offered optimism about the exit market, noting the narrowing valuation gap between buyers and sellers offering a more realistic outlook for future deals. “The gap still exists, but it’s smaller,” Broomfield said, pointing to how sellers are beginning to accept lower multiples.

For CEOs preparing for exits, the recommendations were clear: Use the current lull to get prepared, focus on profitability over growth at all costs and ensure your company’s governance and technology infrastructure are sound. “Get your numbers tight and make sure the story is clean and defensible,” Broomfield said.

Precup cautioned CEOs to remain prepared for alternative outcomes. “What if rates don’t get cut as expected? Let’s be prepared just in case.”

Be transparent. Whether it’s delivering bad news early or maintaining clear communication throughout the investment cycle, trust will be built on openness and willingness to share tough truths. As Broomfield succinctly put it: “Don’t B.S. me.” Fostering a transparent relationship with sponsors not only allows for better resource allocation, timely problem-solving and alignment on strategic goals, but if the business hits a pothole, sponsors will be less likely to panic.

In times of uncertainty, in particular, leaders should regularly engage in proactive conversations with investors. “Where CEOs go really wrong is when they hide bad news, because it’s like a snake in the grass,” said Fields. “It rears its head later on, when it becomes a much bigger problem for the company to face, and it erodes trust. And when that trust starts eroding, that’s a problem.”