Exit Readiness and Preparation

• Sell side value is set years before a banker is hired
• GC retention breaks down around year six when equity has not paid out
• Owner dependence is the core readiness gap for most sellers
• EY: 93% say exit prep boosts valuation, only 65% capture it in EBITDA
• Value creation is shifting from cost takeout to revenue growth
• IPO readiness takes 12 to 24 months of reporting infrastructure work
• CFO mandates now include owning the data and systems architecture

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Deal Structuring and Tax

• A typical PE deal pays 55-75% upfront and rolls 20-30% of equity
• Rollover averages 6.5 years before the sponsor's second sale
• Tax architecture set years earlier can be worth $9M on a $30M sale
• QSBS thresholds rose to a $75M asset cap and $15M per-investor cap
• Management buyouts hand ownership to employees, not PE sponsors
• Dividend recaps need an independent solvency opinion to limit board risk

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Continuation Vehicles and Secondaries

• CVs have grown into a $100bn+ market for trophy assets
• CVs save an estimated $6bn a year versus a traditional buyout
• For services firms, CVs can fund M&A and senior partner hires
• The investor test: would you buy this asset today if you didn't own it
• Secondary deals are moving off WhatsApp onto shared infrastructure

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The Exit Backlog and Market Macro

• The US backlog: roughly 32,000-33,000 companies worth $3.8tn
• At this pace, clearing the backlog could take nine more years
• Tech acquisitions fell 50% in H1 2026 as AI clouds valuations
• Bain's new bar: "12 is the new 5" for EBITDA growth targets
• Sponsor to sponsor exits hit a decade low of $24.5bn in a quarter
• 2025 exit value still rose 41% to $1.3tn despite fewer deals
• Indian PE moved opposite the trend, exiting near one-to-one

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Notable Deals

• KKR sold USI Insurance to Aon for $17bn, a 6.0x equity return
• Apollo sold McGraw Hill to Platinum Equity for $4.5bn in 2021
• Cinven returned 30% of portfolio value, plus a €10bn Stada exit
• SHEIN listed 73% below its $98.2bn 2022 private market peak
• SAH Group's $100M sale is Tunisia's largest ever PE exit

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Thanks to Nick Bradley, Michael Chasen, Dimitri Mastrocola, David Hauser, Chris McClellan, Sohail Jooma, Marie Deller, Kirk Michie, Ankit Shrivastava, Derek Mair, Aaron Naisbitt, Danielle Chetwynd, Ricky Jain, John Koeppel, Snorre Kofoed-Hansen, Darryl Bates-Brownsword, Gavin S., John Maldonado, Lee McCabe, Greg Sellazzo, Vittal Ramakrishna, Michael C. Eisenband, Doug Krupa, Katrina Basic, Seth Merrin, Wladimir Babaew, Ivan Lehon, Sam Chakraborty, Wayne Marhelski, Calvin Creutz, Rittik C., Rohan Parulekar, Leslie D., Philip De Vusser, Paul Cohn, Scott Williams, and Jack Chadam for contributing insights to this edition.