Global Healthcare Private Equity Report

Maximizing Exit Value: An Imperative for Both Sellers and Buyers

Challenging market dynamics and macroeconomic factors are adding to an exit slowdown.

By the Healthcare Private Equity team

First published on enero 09, 2025
min read


Executive Summary Lower exit deal volumes over the past few years, constrained by high interest rates and misalignment between buyers and sellers, are prolonging hold periods. Private equity firms may not be able to rely on historically important multiple expansion to support deal returns to the same degree; thus, sellers will have to double down on value creation to maximize exit value. To develop a successful exit strategy, sellers must take an unbiased view of the asset’s performance and progress and have a plan for future value creation; addressing deal killers and demonstrating real progress on growth initiatives will make a good exit great. Buyers that bake value creation principles into their pre-acquisition diligence gain a competitive edge, making it easier to win the deals they want and hit the ground running on Day 1. This article is part of Bain's 2025 Global Healthcare Private Equity Report. EXPLORE THE REPORT Healthcare private equity (PE) exit deal volume remained low in 2024, down 41% from its 2021 peak (see Figure 1). Interest rates, an uncertain macroeconomic backdrop, and misaligned expectations have resulted in a stalemate between buyers and sellers. Therefore, fewer assets are changing hands, prolonging hold periods and straining funds’ ability to return capital to their limited partners (LPs) (see Figure 2). Figure 1 Global healthcare private equity exits remain down following 2021 peak Note: 2024E values are annualized estimates based on actual deal counts through November 30, 2024, and expected deal counts for the remainder of 2024 using historical data from 2019–2023 Sources: Dealogic; Bain analysis Figure 2 Portfolio turnover has stalled, with hold periods getting longer Note: Percentage turnover calculated as count of portfolio companies exited over count of total portfolio companies as of year in question Source: Pitchbook data as of November 30, 2024 While multiple expansion propelled almost half of total deal returns historically, this lever is unlikely to power returns in the years ahead to the same degree (Figure 3). Stalling multiples, combined with higher financing costs, means sellers must rethink their deal models to make the math work. To break this logjam and deliver expected returns to LPs, PE sellers must think about value creation in a way they haven’t in the past—both at the time of investment and later in the hold period. Figure 3 Interest rates are likely to continue to slow multiple expansion Notes: Enterprise value figures are indexed and should not be used to assess the underlying deals’ performance—that is, a higher indexed enterprise value does not mean a higher deal MOIC; all calculations are in US dollars; deal universe includes fully and partially realized healthcare deals with initial investments in 2010–2024 globally; all equity check sizes; buyout and growth; healthcare includes healthcare IT: software for pharma and biotech, payers, data and analytics, telemedicine and e-health, revenue cycle management, coordination, healthcare workflow management, healthcare payment, workflow and unspecified; sums may not add up due to rounding. Sources: DealEdge.com (data as of November 30, 2024); St. Louis Federal Reserve (data through October 1, 2024) The onus is on sellers To maximize exit value, ensuring both a successful process and a high price, sellers must change how they approach exits. Winning strategies—and management presentations—should include the following actions: Present evidence of actions creating value. Show causal links between management’s actions and results that tie to the original value creation plan. While having a high-performing asset and citing recent management initiatives may once have sufficed, today’s buyers demand more. They want a validated, repeatable playbook outlining value creation levers that will spur profitable growth, such as a proven approach to mergers and acquisitions, delineated strategies for ancillary attach rate growth in healthcare IT assets, and site-level optimization for distributed provider businesses. Reveal the substantial value that remains for the buyer. Outline how the next phase of the value creation plan will fuel revenue growth and capture new efficiencies. Compelling sales pitches don’t simply assert that there is runway for further improvement—they highlight the underlying levers and offer a roadmap with explicit initiatives. Value levers can range from increasing the role of the center for provider assets to detailing capability expansions for medtech; what matters is specifying the building blocks for implementation. Provide reasons to believe. Establish that the initiatives in the plan aren’t just speculative but have already gained traction in the organization and market. This marks a departure from traditional management presentations, which often contained promising ideas but lacked concrete plans for execution. Sellers are most effective when they can point to tangible evidence, such as healthcare IT assets demonstrating increased attach rates and/or demand for new products, which shows buyers that the initiatives, if continued, will be actionable and effective, leaving money on the table for the next buyer. A strategy for maximizing exit value Proof of past performance and a clear articulation of the asset’s potential boosts conviction that the asking price is justified. When preparing to exit, PE sellers must articulate the asset’s equity story and set the stage for the next owners. Maximizing exit value has always been pertinent to sellers, but the current environment heightens its importance. With the decline in sponsor-to-sponsor healthcare deals over the past few years, sellers have relied on synergies such as cross-selling or go-to-market optimization to create value for strategic buyers. However, as sellers look to revive sponsor-to-sponsor deals, applying exit value maximization (EVM) principles will be critical not just for maximizing exit value, but for closing deals. Implementing this type of exit strategy is not something that can be done on the fly. In fact, successful sellers often begin the process a few years before their target exit so they have time to revisit the original value creation plan, reorient strategic initiatives, and generate preliminary results. To develop an EVM game plan, sellers should keep several guidelines in mind: Re-conduct due diligence on the asset. The first step for sellers involves an unbiased assessment of the asset’s performance and progress against the current value creation program. As macro conditions often change over the course of a hold period, one must understand the asset’s current position in the market, positive and negative areas of differentiation relative to competitors, and headwinds or tailwinds affecting the asset’s performance. Sellers should preemptively seek out potential “deal killers” and work to mitigate these issues in the latter part of their hold. Align strategic priorities. The second step is to define the next avenue of growth and develop a strategic blueprint for continued momentum. This means identifying growth levers and understanding their effect on EBITDA. The resulting plan should contain a high-level vision and the initiatives required to realize it, including estimates of the size of the prize and tactical details for implementation. Demonstrate execution of the new plan. The third and most important step is for sellers to begin executing initiatives before going to market, thus making the plan real and delivering early wins that increase conviction in the path forward. This might involve using artificial intelligence capabilities to optimize healthcare IT pricing, redefining providers’ value proposition to increase monetization, or developing prototypes for medtech product expansions. The buyer’s role in value creation This emphasis on value creation applies to buyers as well: It is never too early to start thinking about how to increase value in an asset. Integrating value creation principles into the pre-acquisition diligence can provide a competitive edge throughout the hold period—and enable buyers to hit the ground running on Day 1. Understanding the tactical foundation underlying the value creation levers, as well as the operational complexity involved in realizing them, empowers buyers to assess valuations accurately and with greater confidence. While having a plan for the first 100 days is standard practice, the best buyers start in-depth planning and analysis well before closing the deal. Not zero sum: Sellers and buyers can win together Macroeconomic volatility and a tepid exit environment within healthcare PE have put the onus on sellers to prepare their assets for exit by focusing on their equity story. While economic relief may be on the horizon, we are still in a higher interest rate environment, and buyers are more sophisticated than ever—increasing the need for strong data-based equity narratives to bridge potential gaps between parties. Buyers that integrate value creation into their deal theses and diligence processes position themselves to deliver strong returns to LPs and capitalize on the next wave of opportunities. Read the Next Chapter An Optimistic Growth Outlook in Asia-Pacific Read our 2025 Global Healthcare Private Equity Report Download the PDF EXPLORE THE REPORT More from the report Healthcare Private Equity Market 2024: Year in Review and Outlook Why Mid-Market Healthcare Private Equity Firms Are Outperforming Carve-Outs Open Up Value in a Tight Deal Market Maximizing Exit Value: An Imperative for Both Sellers and Buyers An Optimistic Growth Outlook in Asia-Pacific

Executive Summary

Lower exit deal volumes over the past few years, constrained by high interest rates and misalignment between buyers and sellers, are prolonging hold periods.
Private equity firms may not be able to rely on historically important multiple expansion to support deal returns to the same degree; thus, sellers will have to double down on value creation to maximize exit value.
To develop a successful exit strategy, sellers must take an unbiased view of the asset’s performance and progress and have a plan for future value creation; addressing deal killers and demonstrating real progress on growth initiatives will make a good exit great.
Buyers that bake value creation principles into their pre-acquisition diligence gain a competitive edge, making it easier to win the deals they want and hit the ground running on Day 1.

Healthcare private equity (PE) exit deal volume remained low in 2024, down 41% from its 2021 peak (see Figure 1). Interest rates, an uncertain macroeconomic backdrop, and misaligned expectations have resulted in a stalemate between buyers and sellers. Therefore, fewer assets are changing hands, prolonging hold periods and straining funds’ ability to return capital to their limited partners (LPs) (see Figure 2).

Global healthcare private equity exits remain down following 2021 peak

Portfolio turnover has stalled, with hold periods getting longer

While multiple expansion propelled almost half of total deal returns historically, this lever is unlikely to power returns in the years ahead to the same degree (Figure 3). Stalling multiples, combined with higher financing costs, means sellers must rethink their deal models to make the math work. To break this logjam and deliver expected returns to LPs, PE sellers must think about value creation in a way they haven’t in the past—both at the time of investment and later in the hold period.

Interest rates are likely to continue to slow multiple expansion

The onus is on sellers

To maximize exit value, ensuring both a successful process and a high price, sellers must change how they approach exits. Winning strategies—and management presentations—should include the following actions:

Present evidence of actions creating value. Show causal links between management’s actions and results that tie to the original value creation plan. While having a high-performing asset and citing recent management initiatives may once have sufficed, today’s buyers demand more. They want a validated, repeatable playbook outlining value creation levers that will spur profitable growth, such as a proven approach to mergers and acquisitions, delineated strategies for ancillary attach rate growth in healthcare IT assets, and site-level optimization for distributed provider businesses.
Reveal the substantial value that remains for the buyer. Outline how the next phase of the value creation plan will fuel revenue growth and capture new efficiencies. Compelling sales pitches don’t simply assert that there is runway for further improvement—they highlight the underlying levers and offer a roadmap with explicit initiatives. Value levers can range from increasing the role of the center for provider assets to detailing capability expansions for medtech; what matters is specifying the building blocks for implementation.
Provide reasons to believe. Establish that the initiatives in the plan aren’t just speculative but have already gained traction in the organization and market. This marks a departure from traditional management presentations, which often contained promising ideas but lacked concrete plans for execution. Sellers are most effective when they can point to tangible evidence, such as healthcare IT assets demonstrating increased attach rates and/or demand for new products, which shows buyers that the initiatives, if continued, will be actionable and effective, leaving money on the table for the next buyer.

A strategy for maximizing exit value

Proof of past performance and a clear articulation of the asset’s potential boosts conviction that the asking price is justified. When preparing to exit, PE sellers must articulate the asset’s equity story and set the stage for the next owners. Maximizing exit value has always been pertinent to sellers, but the current environment heightens its importance. With the decline in sponsor-to-sponsor healthcare deals over the past few years, sellers have relied on synergies such as cross-selling or go-to-market optimization to create value for strategic buyers. However, as sellers look to revive sponsor-to-sponsor deals, applying exit value maximization (EVM) principles will be critical not just for maximizing exit value, but for closing deals.

Implementing this type of exit strategy is not something that can be done on the fly. In fact, successful sellers often begin the process a few years before their target exit so they have time to revisit the original value creation plan, reorient strategic initiatives, and generate preliminary results.

To develop an EVM game plan, sellers should keep several guidelines in mind:

Re-conduct due diligence on the asset. The first step for sellers involves an unbiased assessment of the asset’s performance and progress against the current value creation program. As macro conditions often change over the course of a hold period, one must understand the asset’s current position in the market, positive and negative areas of differentiation relative to competitors, and headwinds or tailwinds affecting the asset’s performance. Sellers should preemptively seek out potential “deal killers” and work to mitigate these issues in the latter part of their hold.
Align strategic priorities. The second step is to define the next avenue of growth and develop a strategic blueprint for continued momentum. This means identifying growth levers and understanding their effect on EBITDA. The resulting plan should contain a high-level vision and the initiatives required to realize it, including estimates of the size of the prize and tactical details for implementation.
Demonstrate execution of the new plan. The third and most important step is for sellers to begin executing initiatives before going to market, thus making the plan real and delivering early wins that increase conviction in the path forward. This might involve using artificial intelligence capabilities to optimize healthcare IT pricing, redefining providers’ value proposition to increase monetization, or developing prototypes for medtech product expansions.

The buyer’s role in value creation

This emphasis on value creation applies to buyers as well: It is never too early to start thinking about how to increase value in an asset. Integrating value creation principles into the pre-acquisition diligence can provide a competitive edge throughout the hold period—and enable buyers to hit the ground running on Day 1.

Understanding the tactical foundation underlying the value creation levers, as well as the operational complexity involved in realizing them, empowers buyers to assess valuations accurately and with greater confidence. While having a plan for the first 100 days is standard practice, the best buyers start in-depth planning and analysis well before closing the deal.

Not zero sum: Sellers and buyers can win together

Macroeconomic volatility and a tepid exit environment within healthcare PE have put the onus on sellers to prepare their assets for exit by focusing on their equity story. While economic relief may be on the horizon, we are still in a higher interest rate environment, and buyers are more sophisticated than ever—increasing the need for strong data-based equity narratives to bridge potential gaps between parties. Buyers that integrate value creation into their deal theses and diligence processes position themselves to deliver strong returns to LPs and capitalize on the next wave of opportunities.

Read the Next Chapter

An Optimistic Growth Outlook in Asia-Pacific