With average holding periods stretching toward seven years and buyout funds sitting on approximately 32,000 unsold companies worth $3.8 trillion, boosting exit momentum is at the top of every fund manager’s agenda—or should be.

There’s not much a general partner (GP) can do about the parade of macroeconomic and geopolitical shocks that have plagued dealmaking over the past several years. But there are clear, practical steps sponsors can take right now to refresh the exit story for each company in their portfolio.

When we last wrote about exit value maximization, we suggested a set of key questions sponsors should be asking themselves about every portfolio company:  

• What story do you want to tell buyers in 12–24 months that makes for a compelling deal thesis?
• How much of that story could you credibly tell today?
• Is your strategy still sound, or do you need to define the next wave of growth?
• Where do you already have traction, and where do you still need to gain it?
• Are your resources and talent allocated to the most critical initiatives?
• Have risks emerged that might make buyers walk away in today’s more challenging market?

Since then, we’ve worked through these questions with dozens of portfolio companies. While every situation is unique, we’ve identified six broad archetypes that point to the most useful course of action for six of the most common scenarios (see Figure 1).   

Figure 1

Let’s take a quick look at each one and its suggested game plan. 

1. Keep the party going

Situation: The company has done well under current ownership and still has room to run. But after several years of execution, it’s time for some tactical work to update the value-creation plan and refine where necessary.

Game plan: The model will remain the same, but you need to delineate exactly how the company will repeat its success over the next holding period. This involves refreshing your view of current profit pools and what your share in those pools should be by customer and/or product. It means reestablishing your core “right to win” with those specific customers and allocating the key investments in capacity, personnel, or marketing to make it happen. This is a highly detailed sharpening exercise tied closely to what’s already been working.

2. Find the next big thing

Situation: This type of company has also nailed it under current ownership, but potential buyers may view the core as a bit tapped out or lacking the staying power to generate enough value through the next hold.

Game plan: A successful exit will require not only defining the next growth engine but actually getting it off the ground. This is about building the team, launching the product, and acquiring some early customers. Don’t expect buyers in this environment to simply “believe” what’s coming next. They’re looking for measurable proof points signaling real momentum.

3. Pick a lane

Situation: The challenge here is focus. The company has done well, but it’s not clear (maybe even to management) how to prioritize future opportunities and allocate new investment. Maybe the bets on the table are undeveloped or too scattered to imply much conviction. Maybe some don’t have the punching power leadership initially envisioned. Or perhaps choices need to be made between multiple opportunities that would take the company in different directions.

Game plan: Lack of strategic clarity is always a turnoff to buyers, especially in this environment. They want to know exactly what bet the company is placing so they can appropriately underwrite the investment and effort needed to make that bet pay off. An ill-defined road map also makes it harder for buyers to envision who they will eventually sell to—an increasingly important consideration at the time of underwriting.

What’s required is an exercise in sharp business definition aimed at picking the one or (maybe) two plays that are most likely to generate success over the next five years. A precise game plan will give the company the confidence to allocate resources accordingly, demonstrating to potential suitors that the next phase of strategy is in motion. Note: Deciding what not to do (and why) is often as important as what you end up focusing on.

4. Change the narrative

Situation: There are a few reasons a portfolio company might need to reposition. One common theme is that something critical has changed in the underlying market or competitive situation, requiring a pivot. Another: The company has a “deal killer” embedded—something like extreme customer concentration, unattractive end-market exposure, or problematic regulatory risk that may scare off an ideal buyer. Whatever the issue, it needs to be addressed, and any shift in direction needs to be proved before you can confidently put the asset up for sale.   

Game plan: The first step is detailing what makes the company attractive (or not) in both today’s competitive environment and tomorrow’s. Where does it have a clear right to win, and how is that different from when you bought it? Armed with that analysis, you then need to determine what key actions will reposition the company and accelerate performance in this new direction. That may include developing new products or services, or it might mean pushing existing offerings into new segments, channels, or geographies. What’s essential is to make those decisions now and then stand up the resources to start gaining traction and establishing proof points.

5. Reignite growth

Situation: A company in this group has an opportunity to accelerate growth—either because it is growing at a below-market rate today (i.e., losing share) and needs to regain parity or because management sees a path to gaining share if the company can make the right moves.

Game plan: Sharpening execution by reconfiguring a commercial operation is too often overlooked as a late-stage value-creation lever. But it can be a game changer. The plan might involve the nuts and bolts of retooling the salesforce and developing new sales plays based on better market intelligence. It might be about improving marketing or pricing discipline. Essentially, it’s doing whatever’s necessary to take a company’s go-to-market organization to the next level.

Importantly, to prove momentum at exit, most companies don’t need a full commercial transformation. They just need to put points on the board. We’ve seen companies prove a new playbook with pilots in select markets or business units, giving the next buyer enough data to underwrite the playbook’s rollout across the system. A well-run pilot, in other words, can supply ample evidence that there’s plenty of money on the table for the next hold.  

6. Fuel the next phase

Situation: The company has strong growth ambitions and clear opportunity to achieve them, but it has been held back by cash or capacity constraints.

Game plan: Here the emphasis is on quickly determining what is constraining growth and reducing nonstrategic costs or increasing capacity. The goal is to free up cash and resources to reinvest in what is strategic. That might mean scaling back one market or product category to push harder in another. It could mean better managing nonstrategic expenses or waste (think excess overtime) to reinvest savings in growth. Sometimes it’s about increasing production capacity without additional capital expenditures (e.g., more shifts or reduced machine downtime) to enable greater revenue throughput. Whatever the issue, buyers will take confidence from a clearly defined path forward and demonstrated progress toward a renewed growth trajectory.

Accelerate AI

Needless to say, AI is increasingly a focus these days when funds and management teams discuss exit value maximization. It may be a factor in any of these scenarios. Clearly, the level of urgency and pre-exit investment will vary by situation, but all companies benefit from laying out a clear understanding of the AI opportunities and risks in their industry, assessing their own AI readiness, and prioritizing the areas of their business where AI can have the largest near-term tangible impact.

How fast you move to implementation will depend on the company’s time in hold, the industry, the quantified upside, and the investments required to get there. But having a credible and well-thought-out plan is table stakes.

The value at risk

What this extended exit doldrums is demonstrating every day is that private equity has moved into a new, more challenging chapter. Amid higher interest rates and shifting market dynamics, the deal math has changed, meaning sponsors need to generate significantly more cash-flow growth to make deals work. Buyers are more concerned about potential risks. They are more focused than ever on generating early-hold momentum to ensure they never get behind the underwriting case.

Capturing maximum value for your asset in this environment is all about showing, not telling. Buyers need evidence that the company you are selling is accelerating through the finish line with plenty of room to run.