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Five Traits of Blockbuster PE Exits

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March 13, 2014

When PE News published a well-investigated list of 25 of the best private equity-backed sales of European businesses in the last 10 years, it revealed some common strategies exploited in these large exit deals. The Tally blog selected five and discussed them in a short article. Some of the strategies are what one would expect, like buying cheap (which is getting harder and harder to do), make operational improvements and getting the timing right, but there were two that are maybe less obvious.

 

One is that secondary deals are not likely to deliver a blockbuster exit. Only five of the 25 top exits were secondary deals. Yes, there is lower volatility of returns in a secondary deal, but the cost-cutting and expansion work will most likely have been done by the earlier investors, said The Tally. The other common trait was a holding period for longer than usual five years. According to Tally, almost half of the deals listed were held for five years or more, which suggests that success in European buyouts can often take time to achieve.

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