While still recovering from the recent liquidity slowdown, private equity (PE) monetization activity is improving. The third quarter of 2025 marked the busiest quarter for U.S. IPO issuance since 2021. Follow-on and block trade activity has remained steady against constructive valuation levels, and PitchBook reports that PE strategic and sponsor acquisition valuations significantly increased year-over-year in the first nine months of 2025.
A More Favorable Private Equity Dealmaking Environment
Improving economic conditions – driven by the Fed’s rate cuts, moderating inflation, and tighter credit spreads – are creating a more favorable dealmaking environment. What’s more, the rebounding PIPE market has revitalized SPAC transactions as viable exit paths for certain private companies to consider, while the secondaries market maintains robust volumes.
A Glut of Unrealized Private-Equity-Backed Companies
However, PE has a lot to sell. EY estimates that there are approximately 30,000 PE-backed companies globally. In the current, crowded environment, it is difficult for PE portfolio companies to get noticed by prospective acquirers and investors. Extended holding periods have reduced cash distributions to LPs, limiting their ability to commit capital to new funds and constraining private equity firms’ investment capacity.
Creating a Strategic Approach to Private Equity Exits
With a more favorable – but crowded – market, PE firms must shift their thinking from opportunistic exits to coordinated efforts to position portfolio companies for premium valuations and successful exits. Increased competition will require PE firms to utilize all the tactics available to strategically plan the path to a sale.
Four Imperatives for Positioning Portfolio Companies for Successful Private Equity Exits
1. Start 12-18 Months Before
Firms can no longer wait until the sale process begins. Develop your portfolio company’s enterprise story 12-18 months before a potential exit and share it with key stakeholders early and often. While the SEC restricts market conditioning activities once a company has registered for an IPO, the extended timeline allows for more sustained outreach and stakeholder engagement, which helps generate demand and optimize exit valuations.
Additionally, PE firms and their portfolio companies should preserve exit optionality by crafting messaging that resonates across the full spectrum of potential buyers: strategic acquirers, sponsor buyers, SPAC partners, and public market investors.
2. Implement a Liquidity Communications Program
Liquidity communications is a shift from transactional marketing to systematic awareness building. It’s an investor-centric approach to building awareness, understanding, and relationships that position PE-backed companies for premium exits.
This strategic approach includes:
- Reputation management and visibility components like a strong enterprise story, media relations, and executive thought leadership.
- AI optimization of websites and other public content.
- Critical relationship-building activities with investors, analysts, and market influencers.
- Engagement with PE firms, SPAC sponsors, and potential strategic acquirers.
The desired market response transforms from, “This looks interesting” to “We’ve been hearing about this company, and we’re excited to invest.” That is what a successful liquidity communications initiative delivers.
3. Multi-Track Your Exit Strategy
Modern exit processes require a simultaneous pursuit of multiple paths. Dual-track processes are making way for triple- and even quadruple-tracked paths, including traditional M&A, IPOs, de-SPACs, and secondaries/continuation vehicles.
This changed landscape underscores the importance of liquidity communications and of a portfolio company taking more control over generating market demand and starting the process early. A key element of this new approach is the development of relationships with sell-side analysts and buyside investors.
- Buyside investors, including prospective cornerstones, now require as many as a half-dozen meetings with company management over a 12-month period before committing capital, further extending the timeline required to court investors. Management credibility and consistent, demonstrable company growth are key to a successful exit.
- Sell-side analysts have always played a vital role in telling a company’s story to the investment community, but nurturing these important relationships now takes longer than it once did. It is also a process that companies are increasingly recognizing they must proactively engage in before going public. Building these analyst relationships early improves the likelihood that an analyst will start to cover a company even when it is still private. Active relationship building also helps secure coverage from optimal analysts – those who follow a company’s aspirational peers – to champion the company’s story to investors.
4. Continually Assess and Adjust Your Plan
A liquidity communications program also provides valuable feedback on your enterprise story and your optimal path to liquidity:
- Is your story resonating with public company investors?
- How does your growth profile compare to that of your peers?
- What level of support will you get post-IPO or after the de-SPAC?
- Which exit path will help you achieve your valuation goals? What is the expected timeframe?
- Is your AI strategy credible and differentiated?
- Do investors trust your management team?
- Are there any governance concerns?
Incorporating this feedback from key stakeholders allows for real-time adjustments to ensure the company is best positioned for a successful exit, whether that exit is through an IPO, de-SPAC, or sale to another sponsor or a strategic buyer.
A New Era in Private Equity Requires a New Approach to Exits
As PE-backed companies start heading for the exits again, private equity firms and their portfolio companies cannot afford to overlook liquidity communications. Strategically building awareness and credibility in a way that resonates with prospective investors and acquirers will translate into increased market demand, particularly in the current, crowded exit market.
Firms that move decisively to implement systematic liquidity communications programs will realize advantages in optimizing PE exits across their portfolios.
Learn more about how a strategic liquidity communications program can enhance asset value in this competitive private equity exit market. Download our white paper for more considerations to guide your own leadership team.
Chuck Dohrenwend
In his more than 25 years of experience helping private investment firms and companies, Chuck 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, Clayton Dubilier & Rice, Cressey & Company, JMI Equity, Juggernaut Capital Partners, and Madison Dearborn Partners.
