A woman leaps across a gap in the rocky ridge on top of St Mary Peak at sunrise, the highest point in the Flinders Ranges National Park, South Australia

A woman leaps across a gap in the rocky ridge on top of St Mary Peak at sunrise, the highest point in the Flinders Ranges National Park, South Australia

What can private equity do now to finish strong?

Photographic portrait of Konstanze Nardi

5 minute read 11 Jun 2025

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The EY Private Equity Exit Readiness Study 2025 explores key exit activities, their impacts on exit valuations, execution speed and more.

Three questions to ask:

How can private equity firms address the most critical exit readiness challenges?
How can portfolio companies present their data, KPIs and reporting metrics to provide robust support for their equity story?
How can talent be addressed in advance of an exit to assess if the management team and CFO have the right experience to face buyer challenges?

Private equity firms globally have amassed more than 30,000 assets totalling US$4.1 trillion waiting to be monetized, including 35% of assets that have been held for more than six years¹. Faced with significant geopolitical volatility influencing the macroeconomic landscape on an almost daily basis, firms are operating in a uniquely uncertain market causing many to slow or pause deal activity. But amid the uncertainty, there are definite steps firms can take to optimize their exits when the time comes.

EY conducted a study of 100 private equity professionals (47% Vice President deal professionals, 29% Managing Directors, 24% Operating Partners) and held interviews between March and April 2025. Respondents were from firms headquartered in the Americas (69%) and EMEIA (31%) ranging from US$5 billion to more than US$100 billion assets under management (AUM).

Survey questions focused on current exit readiness practices, key challenges to the exit process, and specific exited and held asset case studies.

For this study, exit readiness activities were defined as those that include, but are not limited to, considering potential exit routes, enhancing a company’s equity story, addressing potential bidder challenges and data granularity, improved systems, processes, controls and governance. It did not include preparation by way of a vendor due diligence.

The EY Private Equity Exit Readiness Study 2025 showed 78% of firms reported holding assets beyond their typical investment horizon of five or more years and 46% of firms exiting five or fewer assets since 2018, with a strong imperative to return liquidity back to investors (exit routes defined as trade, secondary, IPOs, carve-outs or continuation funds).

Most firms are optimistic that the market will settle soon. When asked about when they planned to exit a given asset, most reported within a year (33%) or one to two years (55%). Exit readiness activities play a critical role in optimizing returns.

of private equity professionals reported that exit preparations lead to asset valuation improvements.

Strategic buyers, private equity and IPO investors have tightened diligence standards after sluggish exit years and a high-rate environment. More than ever, firms understand the importance of exit preparations and are dedicating the time and resources to prepare assets for sale, with 88% of firms reporting undertaking targeted exit readiness activities during an asset’s hold period. They start thinking about the exit plan early, with close to half starting exit readiness or preparedness assessments 12 to 24 months in advance of sale.

Critical exit challenges

Firms face key exit challenges, particularly with data readiness. 65% report issues with fully capturing value creation initiatives in the exit EBITDA and 41% of respondents report a lack of access to data granularity to support the equity story. The finance function particularly comes under pressure. Talent considerations, particularly for the finance function, also play a role in exit success.

The chart above displays the most challenging areas in preparing portfolio companies for exit (ranked in top 3 by EY Private Equity Exit Readiness Study 2025). They are: 1. Fully capturing value creation initiatives in exit EBITDA 65%, 2. Capital market strategy 44%, 3. Data granularity that supports the equity story 41%, 4. Management and HR 36%, 5. Clearly defined equity story 32%, 6. Tax considerations 21%, 7. Governance and compliance 20%, 8. Legal and regulatory 16%, 9. ESG considerations 9%, 10. Clear plan for separation 8%, 11. AI strategy 7%, and 12. Other 1%.

Management preparation and CFOs with exit experience are critical to an efficient exit process.

Having the right leadership talent in place with prior exit experience can be critical to a successful sale process. This is particularly true for the finance function, with 63% of respondents citing CFO lacking prior experience with selling a business as a top challenge to exit.

The chart above displays areas of the finance function respondents find most challenging to an efficient sales process (ranked in top 3 by EY Private Equity Exit Readiness Study 2025 respondents). Those areas are 1. Robust set of data and KPIs to support historical and forecast trends 72%, 2. CFO that does not have prior experience of selling a business 63%, 3. Controls, systems and processes 48%, 4. Insufficient resources in the finance function 46%, 5. CFO ability to collaborate with the senior management team at a strategic level 31%, 6. FP&A considerations 23%, and 7. Diversity of experience within the finance function 17%.

When private equity firms don’t meet their valuation targets,

say they wished they had focused more on is preparing management better for an exit.

There are also challenges with finance function staffing. After years of talent shortages and cost-cutting initiatives, many organizations face bandwidth challenges. Forty-six percent of respondents cited insufficient resources as a roadblock to a smooth exit process.

Four ways private equity firms can mitigate talent challenges:

Conduct early management rehearsals to stress test the equity story and assess where the leadership may need to be strengthened.
Quantify the operational capabilities that led to value creation in the current hold period, creating a next-owner playbook to properly aid in the next investor underwriting assumptions.
Enhance the management halo with good preparation for potential bidder challenges. This is especially important as Private equity buyers focus on the management bench and retention when evaluating top quality assets.
Build financial planning and analysis capabilities around forecasting, KPI aggregation and analysis and strategic planning. Augmenting Financial Planning and Analysis capabilities in the short-term around an exit can also positively impact ROI.

The road to optimizing exit valuation is paved with insightful and precise data.

Portfolio companies have a lot more data today, adding to the complexity of incorporating the decisions that go into running the business. It's easy to get lost when trying to present this data for the purpose of a transaction. In more buoyant markets due to the overall activity levels, data was important but could be managed around the deal. Now, buyers expect a deeper level of analysis and insights into a business. A sure way to impact transaction outcome is to provide the requisite level of data granularity for investors to assess the next cycle of returns.

of respondents cite a lack of robust data and KPIs supporting historical and forecast trends as the biggest challenge to finance function exit readiness.

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Typical data challenges include:

Data capabilities, often driven by under-investment in data integration across the enterprise.
Systems and controls, the most cited reason why the right level of data granularity cannot be provided and is often driven by a proliferation of IT applications in the Finance technology stack.

When clients prepare with data readiness activities such as data cleansing and integration, they can promote exit valuations by:

Leveraging data to craft an equity story supported by KPIs and granular data.
Enabling detailed tracking of value creation initiatives (including their impact on EBITDA), including identifying quick wins achievable in the 12 months prior to exit.
Reducing the work required in the deal process, with less scope for surprises during the diligence phase and bidder challenges.

Summary

Private equity firms looking to exit assets need to be ready at any moment to capitalize on transaction opportunities. Reassessing exit preparation strategies, particularly around data and talent readiness, will be critical to capturing targeted returns for investors. Firms that have applied a buyer lens to assets well in advance of an exit, have the data to underpin the equity story and a well prepared management and finance team will invariably finish strong.

About this article

Photographic portrait of Konstanze Nardi

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.