Exits and the Realization of Value

An exit converts an ownership claim into cash or another asset that can ultimately be distributed. It is the point at which reported value meets an executable market price. An attractive valuation in a quarterly report is useful information, but it does not pay the fund's investors.

Exit planning should begin during underwriting. The buyer needs a view of who might own the company next, what those buyers would value, and what evidence they would require. That view should develop during ownership as the business and markets change.