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I work for a company that is private equity (PE) backed and has primarily grown over the last 5 years through mergers and acquisitions (M&As). In fact, I joined the company via one of the acquisitions about 1.5 years ago.

I know that the main 3 exit strategies for the investors are:

  1. Sell the company to a competitor.
  2. Go public and cash out post-IPO.
  3. Sell the company to another PE firm via a secondary leveraged buyout.

What I'm hoping people here can answer is, what are the signs that one of the 3 above items is impending, and are there any signs as to which one of the 3 is most likely?

Thanks for your insights!

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    When you see guys in the lobby with briefcases full of cash and your boss in Bermuda shorts and a floral shirt.
    – Theodore
    Commented Jul 27, 2022 at 20:22
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    Yeah, that would be a good sign. Unfortunately, that's the one downside of being fully remote, no ability to see strangers walking in or execs walking out!
    – Mr. E
    Commented Jul 27, 2022 at 20:23
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    Do you know who the private equity investors are and how they have exited previous investments?
    – matt freake
    Commented Jul 27, 2022 at 20:43
  • I left the exit-planning tag on your question on the assumption that you're trying to figure out when to jump ship. Is this correct?
    – BSMP
    Commented Jul 27, 2022 at 21:53
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    You are unlikely to know unless you're at least peripherally involved in discussions where the names of any those topics might come up. PE backed companies regularly expand and contract. I'd watching for phrases like "pause on hiring", "re-evaluate spending" or anything else that signals the people at the top are watching the finances super closely and/or pinching pennies.
    – Joel Etherton
    Commented Jul 27, 2022 at 22:45

1 Answer 1

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To know which exit strategy they are likely to use, you need to research the private equity firm and see how they have historically exited from their investments. Obviously, there is a chance that they don't follow a specific pattern and even if they do there is nothing preventing them from using a different strategy for your current company.

As to signs that one of these items is pending, being that you are a remote worker it would largely depend on your role at the company or who you know.

Depending on your role, you may receive unusual requests or notice uncommon audits related to your role. For example, if you are working in the IT side, they may want to do an unscheduled security posture check or penetration test ( assuming your company regularly performs these ). Maybe you work in the accounting or financial side and the PE begins asking for more than usual figures, forecasts,....etc.

The easiest way is if you know someone high in your company's hierarchy and have a good enough relationship where if they knew about some impending event they would have no issue mentioning or discussing with you.

Unfortunately, other than researching the PE yourself, the others will likely be mostly out of your control. Just do your job and try not to worry about it. Remember that the question isn't if the exit will happen, it's when.

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