The Buyout Exit Advantage

Global Median Exit Markups During the Year Prior to Exit

Over the last 18 months, critics of buyout deal performance have often claimed that GPs must inevitably exit their holdings at a loss to prior valuations. The lofty valuations from the last several years should surely have to be sold below the purchase price!    

From Q2 2021 – Q2 2023, we observed the “peak” valuations window, seen in 2021 through the market volatility of 2022 - 2023, for realized buyout deals. The data shows that, during this timeframe, on average, deals were exited at a premium to their holding value, relative to their previous valuations.  

Re-running this analysis across different time periods over the last several years, the trends have remained consistent. We believe this suggests that GPs are perhaps more conservative in their valuations than what critics suggest. If public markets are going up, GPs may try to avoid false expectations and provide more cushion in what they are presenting as valuations. This healthy conservatism can also extend into turbulent periods as seen in the last two years where buyout deals continued to be exited at premiums. Can your public equities say the same?  

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Definitions

Corporate Finance/Buyout: Any PM fund that generally takes control position by buying a company.