Critical Communication Practices for PE Exit Paths

Summary

Private equity sponsors are navigating four primary exit paths—strategic or sponsor sales, IPOs, SPAC transactions and continuation vehicles—each with distinct demands. Below, we outline tailored liquidity communications strategies for each route to help drive demand, support valuation and optimize LP outcomes.

• Strategic/Sponsor Sales: Showcase value creation and proactively engage buyers and industry influencers.
• IPOs: Build relationships with institutional investors and analysts starting up to two years before an exit.
• SPACs: Secure PIPE support and demonstrate public company readiness.
• Continuation Vehicles: Align LPs and clearly articulate forward value creation.
• Across All Paths: Start early to condition the market and maximize exit value.

Private equity’s liquidity challenges of the past few years have prompted sponsors to get creative when it comes to realizing value from their portfolio companies. What was once a fork in the road is now a four-way intersection of possible exit paths: selling to another sponsor or a strategic buyer, taking the company public via IPO and aftermarket share sales, going public via a SPAC transaction, or executing a secondary sale to a continuation vehicle.

Drivers approaching a four-way intersection must remain alert, open to all possibilities, and mindful that there are actions they should take regardless of which way they turn. Similarly, early in the investment lifecycle, private equity sponsors may not know the exact path for a portfolio company’s exit, but they should be prepared for all opportunities to maximize valuation. Developing a compelling enterprise narrative and implementing a strategic profile-raising program for portfolio companies well in advance of an exit will help generate market demand and will open the door to multiple exit paths — and to higher valuations and better returns for limited partners (LPs).

Liquidity communications – an investor-centric approach to building awareness, understanding, and relationships to position companies for premium exits – does just that. This strategic program helps build a foundation well in advance of an anticipated exit so PEs can be prepared for and pursue the most desirable exit path.

Sponsors that fail to raise sustained awareness about their portfolio company and proactively engage with prospective buyers and investors risk leaving a significant amount of money on the table. Experience tells us that the portfolio company will lack market recognition, and the sponsor will lack sufficient industry intelligence to assess the optimal exit route. Over time, failure to utilize liquidity communications can damage a sponsor’s credibility with LPs and lead to fundraising challenges as LPs choose to commit capital to those firms they perceive to be better performing, whether or not the metrics bear out that perception.

Key Communications Approaches for Four Unique PE Exit Paths

While liquidity communications are essential for all private equity exits and each of the four possible exit paths share a few similar tactics, it is not a one-size-fits-all approach. Each exit has its own nuances and stakeholder considerations, as well as unique liquidity communications best practices::

1. Strategic and Sponsor Sales: Stand Out in a Competitive PE Exit Market

According to PitchBook, the exit backlog is starting to clear, with a  double-digit, year-over-year increase in private equity exits in 2025. M&A conditions are expected to continue improving in 2026, but since buyers remain selective about their investments, they are looking to purchase companies with strong management teams and clear growth trajectories.

It will be critical for sponsors to “show their work” and translate their operational improvement initiatives and the additional value-creation opportunities ahead of them into public-facing content and engagement that can help these portfolio companies stand out in the crowd.

Portfolio companies looking to exit by way of a sale to another sponsor or a strategic should:

• Engage with private equity and vertical industry beat reporters on earned and paid media placement opportunities.
• Leverage LinkedIn, websites, and other owned channels to reach prospective buyers.
• Attend private equity, vertical industry and public equity investor conferences to interact with fellow attendees.
• Communicate with employees, customers and other key stakeholders to build loyalty and enthusiasm about the company’s continued growth.

2. IPO: Start the Process Early

PwC found that traditional IPOs raised $33.6 billion in 2025, the highest level since 2021. This year is also shaping up as an active one for sponsors to exit their portfolio companies through IPOs. While institutional investors’ appetites are high, they are not investing in just any private equity-backed company. They are looking for quality and want to engage with IPO candidates and their management teams well in advance of any formal IPO process. In fact, the rules of engagement have changed a lot over the past year. Institutional investors now want to begin meeting with management teams up to two years in advance to gain a full understanding of the company’s growth strategy and the management team’s ability to deliver results.

IPO candidate companies should:

• Conduct multiple meetings with institutional investors over multiple quarters. These should be high-level discussions to help build familiarity with the business and confidence in the management team.
• Engage in private company tracks at investor conferences. Nurture working relationships with sell-side analysts and allow the company to get to know the buy-side.
• Develop and execute a strategic communications program that builds awareness within the public investment community before an IPO, Following the IPO, this will strengthen investor support for the company’s stock in the aftermarket and ensure the company’s valuation is commensurate with its growth prospects and performance.
• Create alignment between the sponsor and prospective investors by developing and executing a conservatively paced sell-down plan at the IPO and in the aftermarket.

3. SPACs: Don’t Underestimate the Importance of the PIPE

Everyone remembers the 2020-2021 SPAC boom. While the frenzy subsided for a few years after many of these companies failed to meet revenue projections, SPACs are once again a viable pathway for certain companies to go public.

As with traditional IPOs, it is important to build meaningful relationships with buy-side investment firms and sell-side analysts well in advance of a SPAC exit. It will be especially important to develop messaging that highlights the company’s value proposition and emphasizes that it is prepared to operate as a public company, to mitigate any buy-side concerns that the sponsor is opting to exit through a SPAC transaction.

Through our experience structuring and advising on hundreds of SPACs, we have found that engagement with LPs and prospective PIPE investors is essential. Sponsors must convince their LPs that a SPAC transaction is the best route to liquidity for the portfolio company. Additionally, sponsors need to familiarize prospective PIPE investors with the portfolio company prior to the actual SPAC transaction. Our experience tells us that sufficient PIPE support is indispensable to enabling the portfolio company to become a viable publicly traded company following the SPAC transaction.

SPAC-candidates should:

• Engage with potential PIPE investors, starting well before the formal launch of the SPAC transaction process. Conducting multiple meetings with these firms will help build familiarity with the business and confidence in the management team.
• Meet with the SPAC’s investors soon after the public announcement to gain their support and rollover investment in the de-SPAC’d company.
• Build and maintain the corporate governance and infrastructure required to successfully operate as a public company.

4. Continuation Vehicles: Position Carefully and Engage LPs

The market for continuation vehicles (CVs) remains robust, despite concerns among some LPs about the inherent conflicts of interests for sponsors due to the short turnaround time to evaluate the deal and associated fee structure. In fact, Marcus Frampton, chief investment officer of the Alaska Permanent Fund, recently said that “continuation vehicles are indicative of rot in private equity.” Given this perception gap between investment firms and their LPs, sponsors taking this path must:

• Engage with LPs, including those outside the LP Advisory Committee (LPAC) and clearly explain why a CV transaction is the best path forward for the portfolio company and the LPs.
• Use owned and earned channels to discuss the company’s future growth strategy and engage with other sponsors that may look to make an anchor investment in the CV transaction.
• Highlight future value-creation opportunities in all communications, especially the CV announcement press release, to attract the attention of future buyers/investors (in anticipation of the eventual, full exit).

No matter which road a sponsor takes when exiting a portfolio company, liquidity communications is essential for conditioning the market and generating demand for the portfolio company among prospective buyers and investors. Starting to approach this intersection early – and moving along each of the four paths concurrently – can make the difference between a resoundingly successful exit with supportive LPs and stuck exits with LPs prioritizing other sponsors. 

Learn more about how a strategic liquidity communications program can enhance asset value. Download Liquidity Communications — Enhancing Asset Value in a Challenging Private Equity Exit Market or contact our team for an in-depth conversation.

Chuck Dohrenwend

In his more than 25 years of experience helping private investment firms and companies, Chuck Dohrenwend has been involved with a wide range of strategic communications initiatives, focusing heavily on working with private equity firms and their portfolio companies to optimize their investment and value-creation strategies through strategic communications. He has collaborated with executive and communications teams to develop and implement highly effective communications programs for a range of stakeholders. His private equity clients have included Advent International, CCMP Growth Advisors, Clayton Dubilier & Rice, Cressey & Company, JMI Equity, Juggernaut Capital Partners, and Madison Dearborn Partners.

Caroline Roseman

Caroline Roseman provides strategic counsel to public companies and private investment firms on a variety of matters, including profile-raising initiatives, M&A, leadership transitions and crisis management. She works closely with leadership teams and boards of directors to develop and implement targeted communications programs that address stakeholders’ needs and preserve and enhance value during pivotal corporate milestones. Her private equity clients have included CCMP Growth Advisors, Clayton, Dubilier & Rice, Eurazeo, Siris Capital Group, and Tayeh Capital Group, as well as portfolio companies of and transactions involving Blackstone, TPG, L Catterton, and JAB Holdings.