New GIB Report Outlines Top Drivers of PE 'Best Exits'
CHICAGO/LONDON – Jan. 5, 2023 - Baird, a leading global investment bank, recently released a report outlining the drivers of the best private equity exits of the past 18 months. Baird’s Global Investment Banking business partnered with H/Advisors Cicero to interview nearly 100 senior PE professionals across key geographies and explore their best exits between Q1 2021 and Q3 2022, looking closely at the contributing factors that made those exits so successful. Exits cited in this report achieved a median exit enterprise multiple of 15x (17x as an average).
The report’s key findings were:
- Growth is King – 63% of Best Exits involved add-ons, generating revenue growth and cost synergies plus multiple arbitrage.
- The “Secret Sauce” is in the Team and the Tech – 78% of Best Exits involved transforming the leadership team - procuring and managing top talent was the most cited value driver.
- PE-to-PE Deals Most Common – 71% of Best Exits came from secondary or tertiary buyouts.
- PE is “Patient” Capital – 60% of Best Exits came after a hold period of at least 4 years, while 53% of PE firms exited when they planned to or later.
- Bespoke Processes = Best Exits – More than 75% of firms prepare for an exit at least one year prior to exiting the investment.
In the report, Baird acknowledges that the exits cited benefited from macroeconomic and financing liquidity tailwinds that no longer exist today but says that the key findings apply in a variety of M&A markets.
While the current market environment looks very different than the timeframe of this study, the report makes clear that private equity as a whole continues to elevate its ability to build “must own” assets. Outcomes in future periods of disruption will require teams to work harder, but it will be exciting to see how those disciplined and consistent investors grow the next investments and turn them into best exits.Les Cheek, Head of Baird’s Global Financial Sponsors Group
The benchmark for the best exits cited in this report – exit enterprise multiples averaging 17x and a mean of 15x – is meaningful. Highly favourable M&A market conditions were clearly a contributing factor around these best exits, but even when accounting for those historic market conditions, that kind of multiple expansion also requires savvy investment strategy, thoughtful execution, and sophisticated exit processes. And those elements, regardless of market conditions, clearly can drive significant value creation.Vinay Ghai, Managing Director in Baird's Financial Sponsor Group
To see the full report’s contents, click here or reach out to one of the media contacts listed below.
Notes to Editors | Methodology and Acknowledgements
To better understand the developing trends among private equity’s best exits, Baird gained quantitative and qualitative insights from Private Equity (PE) professionals on their best exits over the previous 18-months in partnership with H/Advisors Cicero.
During a series of interviews with 96 senior PE professionals across key geographies, participants were asked to speak to one example which they considered their ‘best exit’ over the last 12-18 months (2021-22). These insights inform the basis of this report.
About Baird Global Investment Banking
Baird is a leading global investment bank serving the M&A, restructuring, equity financing and debt advisory needs of its clients throughout the United States, Europe and Asia. Since 2017, Baird has completed more than 700 advisory transactions, representing nearly $255 billion in transaction value, and nearly 500 financings, raising $195 billion. Learn more about Baird's advisory transactions and services here.
Putting clients first since 1919, Baird is an employee-owned, international wealth management, asset management, investment banking/capital markets, and private equity firm with offices in the United States, Europe and Asia. Baird has approximately 4,800 associates serving the needs of individual, corporate, institutional and municipal clients and more than $360 billion in client assets as of June 30, 2022. Committed to being a great workplace, Baird ranked No. 27 on the 2022 Fortune 100 Best Companies to Work For® list – its 19th consecutive year on the list. Baird is the marketing name of Baird Financial Group. Baird’s principal operating subsidiaries are Robert W. Baird & Co. Incorporated and Baird Trust Company in the United States and Robert W. Baird Group Ltd. in Europe. Baird also has an operating subsidiary in Asia supporting Baird’s investment banking and private equity operations. For more information, please visit Baird’s website at www.rwbaird.com.
Jonathan Cook or Sam Turvey, H/Advisors Maitland
+44 (0) 20 73795151
Rachel Berkowitz, Baird Public Relations
+1 (414) 765-7250