“Uncertainty makes it difficult to determine the value of a business, leading to widely divergent pricing expectations from buyers and sellers.” PitchBook, Q1 2025 Global Private Market Fundraising Report

After years of inflationary pressures, companies looking toward an exit expected a favorable M&A environment in 2025. Halfway through the year, private equity firms continue to grapple with pervasive market uncertainty in charting the optimal path for their portfolio companies. Sellers need to exit to provide liquidity to investors but are finding few—often unideal—options.

Exits in 2025 May Not Look Traditional…

… however, liquidity is nonnegotiable for many investors. In any approach, exit plans are not just required, but are a catalyst for successful outcomes during particularly uncertain times.

Despite lackluster dealmaking in Q2, many sectors could be on the precipice of momentum. The significant increase in average hold cycles has become the new normal, creating a backlog of companies that would like to make an exit. The strategy of ‘waiting and seeing’ for months, if not years, has a shelf life, and private equity is increasingly leveraging alternative liquidity sources. For investors who are considering their liquidity options, it is important to consider how the approach to portfolio value creation opportunities may be affected.

Immediate Sale or Short-Term Exit

Within the current market landscape, certain sectors remain relatively insulated from broader economic challenges, continuing to demonstrate strong growth and a promising future. Companies in these sectors may have a favorable outlook and approach a near-term sale with confidence. However, other sectors —while still fundamentally solid—face greater headwinds and are at risk of achieving a valuation below expectations.

This dynamic often leads to a greater willingness to accept a lower-than-ideal valuation in exchange for a swift, traditional exit. In these cases, rigorous planning for exit becomes critical. Preparing detailed financials, showcasing commercial strengths, and proactively addressing potential issues help ensure a smoother transition and maximize value.

Moreover, clear messaging supported by data on how the company has navigated recent disruptions can significantly strengthen positioning with prospective buyers. Companies planning for exit can leverage real-time data to showcase quantitative, or even qualitative, growth drivers and value-creation upside for buyers.

Continuation Funds and Other Alternative Liquidity Events

If selling immediately isn’t an option, private equity firms are increasingly turning to continuation funds to provide breathing room for liquidity needs and the window for exit. The growth of continuation funds has reshaped how private equity firms approach transparency and ongoing evaluation, driving an increased need for targeted diligence and strategic value reassessment throughout extended hold periods. Some key considerations include:

  • Secondary offerings have “diligence-like” requirements: While not a full diligence process, secondary sales of a specific portfolio company require transparency into historical business performance. Diligence requirements for this approach may be less intensive than a full sale, however, it remains essential to present a compelling business narrative and demonstrate the company’s strengths.
  • Hold-cycle extensions should be strategically leveraged to re-assess the value creation plan: A more structured, cyclical approach to exit planning, or re-diligencing, can provide a short- to medium-term value creation plan that ties to specific exit goals and timelines. Taking time to refine these strategies can bolster the company’s positioning for a more profitable future sale.

How to Differentiate Your Business in a Competitive M&A Market

Macroeconomic uncertainties are a significant headwind to fundraising in 2025. In its Q1 2025 Global Private Market Fundraising Report, PitchBook highlights the impact of global trade disruptions, stating, “In the face of on-again, off-again tariffs, investors are struggling to make decisions.” Deal activity remains weak, and many investors, especially those “at or above allocations” will be “incredibly selective in where they make commitments in 2025.” This greatly impacts the ability for sellers to successfully transact at their desired timeline and ROI.

Successful organizations have learned how to utilize uncertainty as an opportunity to differentiate themselves in a market where buyers are increasingly focused on value creation. This requires sellers to conduct rigorous exit planning that moves beyond a survival-oriented mindset to a more strategic—and rewarding—playbook that views uncertainty as a compelling framework for positioning a business as a strong, dynamic investment opportunity.

1.  Demonstrate Consistent Outcomes

First, businesses need to clearly demonstrate how they can deliver consistent outcomes within a predictable band of performance, regardless of external conditions. This means showcasing financials and results that remain stable when operating in turbulent environments.

INSIGHT Client Example: A food packaging manufacturer was in the process of expanding their retail channel. A large portion of their legacy retail sales were tied to seasonal promotional activity. INSIGHT developed more detailed customer segmentation to better explain how the distribution segment of the business performed steadily and was not impacted by seasonality.

2.  Emphasize Durability

Consistency provides predictability, but durability requires the ability to pivot quickly and adapt to market changes. It’s crucial to invest in capabilities that drive organic growth, such as cross-selling, and a continuous improvement feedback loop. This includes data and commercial operations that are robust enough to offer visibility into performance that allows for quick adjustments and confident strategic decisions when navigating unpredictable markets.

INSIGHT Client Example: A packaging manufacturer had significant growth in margin rate over the past several years, to the point where prospective buyers were concerned the new baseline was not sustainable. INSIGHT created materials that detailed the sources of margin growth and joined calls with prospective buyers to discuss why the new margin rates would be sustainable.

3.  Focus on Momentum

Momentum is actionable and measurable and serves as a track record of achievements that signal readiness for an exit. If an exit timeline doesn’t allow for the full realization of a value creation initiative, momentum matters. Businesses can do the following:

  • Have strong analysis that points out the ability to uncover the specific challenge and take action against it
  • Emphasize what qualitative actions the business has taken, such as updated processes, systems, or policies, to prove capability advancement
  • Ensure real-time access to quality data so that results and progress can continue to be updated

INSIGHT Client Example: An adhesives manufacturer recently implemented a value creation initiative with INSIGHT. We created materials and represented the Client on calls with prospective buyers to explain the progress made thus far along with the future gains we expect the company to make as the initiative continues.

4.  Relentless Visibility

Many opportunities can be misunderstood, overlooked, or considered complete. Investors need potent visibility of all potential value creation opportunities—at all stages of the hold cycle—and associated gaps in their business to gain a differentiated advantage in the market.

To understand feasibility, map constraints and benefits, such as level of investment, execution readiness, and benefit timeline. Businesses can then select initiatives that generate the most impactful ROI based on the target timeframe, while maintaining a flexible strategy that can be revisited and adjusted as macroeconomic conditions shift.

INSIGHT Client Example: A distributor in the restaurant and foodservice space won a key account that became a material share of annual revenues and was also growing across the broad customer base. The business was concerned buyers would focus too much on the key account, and not the countless other areas of opportunity in the business. INSIGHT created marketing materials that highlighted the positive impact of the growth excluding the key account.

Capitalizing on Uncertainty – How to Move from Defense to Offense

Increased exit activity is an eventual probability, driven by fundamental market requirements. When preparing for an inevitable exit in today’s market, businesses need to go beyond promises and demonstrate tangible evidence of capabilities.

The following table provides sliding guidelines for developing a strong exit planning foundation in order to effectively differentiate a business to potential buyers.

Performance Measurement

  • Good: Granular back-looking performance visibility to validate hypotheses
  • Better: Real-time data accessibility for point-in-time decisions
  • Best: Leading indicators that trigger proactive, strategic decision-making

Commercial Processes

  • Good: Policies and expectations are clear and followed; Can identify non-compliance
  • Better: Able to execute initiatives with a high degree of effectiveness and realization; Processes are designed to be scalable and resilient, ensuring they withstand external pressures without compromising on quality or efficiency
  • Best: Highly agile Center of Excellence capable of swiftly adjusting priorities and executing changes with high efficiency and realization

Data Systems & Capabilities

  • Good: Data availability and supporting resources
  • Better: Centralized data cube to enable consistent, impactful analytics
  • Best: Fully automated workflows that input real-time data for optimal decision-support across use cases

Clear Roadmap / Growth Strategy

  • Good: Established baseline growth initiatives and estimated potential financial impact
  • Better: Initiated implementation of ‘quick wins’
  • Best: Established growth plan; built momentum and quantified impact of key growth initiatives

Navigating Buyer Questions

  • Good: Access to data that can quickly satisfy buyer questions as they come in
  • Better: Clear analytics prepared for critical common questions around areas such as price sustainability and organic growth
  • Best: Proactively provide granular evidence of capabilities, growth, and ability to effectively manage disruption

Maximize Exit Value with INSIGHT2PROFIT

In today’s economic climate, businesses face the challenge of navigating compounding uncertainty while positioning themselves for successful transactions. This requires deliberate preparation and a clear focus on differentiating capabilities, ensuring durability, and building momentum. While uncertainty may be inevitable, it can also be transformed into an opportunity to showcase resilience and adaptability—qualities that win in any market.

If you need help identifying where to focus, driving short-term wins, or leveraging your data for a confident, fact-based value story, INSIGHT can help. Contact us to learn how we can deliver tangible growth and maximize exit outcomes for your business.

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