— M&A 실전 가이드 시리즈 | Exit & 회수전략 (1/5)
Executive Summary
The success or failure of an investmentis determinednotbythe entry point, butby the exit. No matter how low the valuation at acquisition, if you fail to exit at the right time and through the appropriate channel, it remains merely an IRR on paper. In 2025, the global PE market's exit volumerebounded 41%year-over-yearto $1.3 trillion, reaching the second-highest level on record. However, the average holding period remains longat 6.6 years, compared to the 2011-2020 average (6.1 years), and the unsold portfolio (backlog) exceeds $3.2 trillion, maintaining exit pressure on GPs.1
Through 10 exits, including experiences at Company O and Company S, I achieved cumulative recoveries of approximately 1 trillion won with an average IRR of 21.4%. This content examines the structural differences between the three primary exit pathways—IPO, Strategic Sale, and Secondary—and presents a practical framework illustrating "when, what, and why to choose" each option.
I. 2025–2026 Global Exit Environment… Recovery or Illusion?
The Reality the Numbers Tell
The global PE exit market clearly improved in 2025. According to S&P Global, the number of exits worldwide reached 3,149, a 5.4% increase year-over-year, while McKinsey reported a 41% growth in exit value to $1.3 trillion. The PE-backed IPO market recovered to over $320 billion, nearly double the previous year's figure.2
However, we must read between the lines of these figures. The ratio of total exits to new buyouts stands at 68%, the highest since 2021, yet it still falls short of the long-term average of 72% from 2015 to 2020.
In other words,the structural imbalance where exits fail to keep pace with deploymentcontinues. 3
2026 Outlook: Multi-track as the default
PwC projected that secondary transactions—particularly Sponsor-to-Sponsor deals and Continuation Vehicles—will remainthe dominant exit route for private equityin 2026. Goodwin analyzed that IPOs and dual-track processes are emerging as more realistic options in the U.S. upper-middle market. In the Korean market, Kearney also forecasts that liquidity and flexibility will improve with the expansion of GP-led secondary transactions.4
The key point is that the era of relying on a single exit path has ended.A 'multi-track' approach, pursuing multiple exit scenarios simultaneously, has now become the industry default.5
II. Three Major Exit Paths … Structural Differences and Decision Criteria
Exit Path Comparison Framework
| Item | Initial Public Offering | Strategic Sale | Secondary |
|---|---|---|---|
| Valuation Premium | High (Market Multiple Applied) | Medium to high (Synergy premium possible) | Mid-range (Discounts available relative to NAV) |
| Transaction certainty | Low (Exposed to market fluctuations) | High (negotiation-based) | High (Structurable) |
| Duration | 12 to 18 months and older | 6 to 12 months | 3 to 6 months |
| Residual equity risk | Lock-up period exists | Typically 100% sale | Varies depending on the structure |
| LP Liquidity Provision | Phased (after lock-up) | immediately | Immediately or in stages |
| Burden of information disclosure | Very High (Disclosure Obligation) | Restricted | Low |
| Eligible Assets | Clear growth story, large scale | Strategic synergy exists | Operational stability, robust cash flow |
Path 1: IPO — "The market puts a price on your story"
An IPO is the most attractive path for maximizing valuation. As demonstrated by Medline's $7.2 billion listing—the largest PE-backed IPO in 2025—the ripple effect when the market is open is overwhelming.6
However, IPOs account foronly 5%of all PE exits by number of deals, and even by value, they represent just 23% of deals exceeding $500 million. IPOs are not a suitable path for all assets. 7
The following conditions must be metsimultaneouslyfor an IPO to be a valid option.
- Revenue requirements: Annual revenue of 300 billion won or more, stable EBITDA margin
- Growth Narrative: 15%+ revenue CAGR over the next 3-5 years or a clear TAM expansion story
- Market Window: Bullish IPO Market + Sector-Wide Multiple Uptrend
- Management Capabilities: Ability to establish IR, disclosure, and governance systems as a public company
[Experience/Case Study]
This case study shows a REIT IPOachieving a +25% increase over its offering price. The key to its success was completing two years of asset portfolio optimization and dividend yield simulationsbefore the IPO decision. The outcome of an IPO is decided not on the 'listing day', but 'two years before deciding to list'.
Path 2: Strategic Sale — "A Deal That Buys Certainty"
Strategic Sale remains themost dominant exit pathin 2025. The greatest advantage of selling to a strategic buyer is the certainty of close.8
The circumstances where strategic divestment shines are clear.
- Synergy Premium: When the buyer can quantify cost savings or cross-selling synergies
- Speed First: When LP liquidity provision is urgent or fund maturity is imminent
- Scale constraints: Middle-market assets that struggle to meet IPO requirements
- Competitive sale process: When competition can be induced among multiple strategic buyers
[Key Considerations]
However, the reduction in strategic buyers (in sectors undergoing industry consolidation), regulatory risks (antitrust review), and the risk of information exposure during the due diligence process must be considered.
Path 3: Secondary — "New Default"
A survey indicates that 38% of PE sponsors prefer secondary buyouts, underscoring that secondaries are no longer a 'fallback option' buthave become a mainstream exit route. Notably, the rise of GP-led secondaries (Continuation Vehicles) is reshaping the market landscape.9
The structural advantages of the secondary are as follows.
- Controlled Liquidity: Providing liquidity to LPs without the market risk of an IPO
- Option to extend holding period: GP may continue managing high-quality assets through the Continuation Fund
- Efficiency of Price Discovery: Deriving a Reasonable Price Through Bilateral Negotiation
- Flexible structure design: Customizable deal structuring possible, including partial sales and equity rollovers
[Key Considerations]
However, caution is warranted regarding the discount to NAV issue, managing conflicts of interest between GPs and LPs, and the requirement to meet the expected return of secondary buyers (typically a Net IRR of 15–18%).
III. Exit Decision-Making Framework … A Four-Step Approach
When selecting an exit route in real-world situations, the framework I use consists of the following four steps.
Step 1: Portfolio Asset Classification (Asset Tiering)
First, classify the held assetsinto three tiers.
- Tier 1 (Crown Jewels): Market-leading position, EBITDA margin 20%+, robust growth rate → IPO or premium strategic sale candidate
- Tier 2 (Core Performers): Stable cash flow, slowing growth → Strategic sale or secondary candidate
- Tier 3 (Turnaround / Non-core): Requires restructuring or is strategically unsuitable → Consider early divestment, divestment by asset, or write-down
Step 2: Market Context Mapping
Market conditions are decisive in selecting exit paths. Simultaneously evaluate the following three variables.
- Capital Market Window: IPO Market Boom Status, Peer Sector Multiple Trends
- M&A Market Activity: Strategic Buyers' M&A Intentions, Dry Powder Size
- Interest Rate Environment: Borrowing costs directly impact the bid price of LBO buyers.
In 2025, the IPO market showed signs of recovery amid expectations of interest rate cuts, but geopolitical uncertainties complicated the timing of strategic sales.10
Step 3: Dual-track / Triple-track design
Betting everything on a single track is risky. In practice, a dual-track processinvolving at least two parallel pathsis standard.11
- IPO + Strategic Sale Dual-track: Proceed with IPO preparations while simultaneously engaging with strategic buyers. If market response falls short of expectations, transition to a Strategic Sale.
- Strategic Sale + Secondary Dual-track: Simultaneously pursuing strategic buyers and engaging secondary buyers
- Triple-track: For large assets, there are cases where all three options—IPO, strategic acquisition, and secondary offering—are kept open.
Step 4: Scenario-Based Return Simulation
Final decisions mustbe validated with numbers. Simulate the following variables for each exit path.
Using a hypothetical mid-cap portfolio company as an example,
Assumptions: Investment principal 115 billion KRW, EBITDA 30 billion KRW, holding period 4 years (Stress Case 5 years)
| Scenario | Exit route | Expected EV/EBITDA | Equity Value | Gross Internal Rate of Return | MOIC |
|---|---|---|---|---|---|
| Base Case | Strategic Sale | 10.0x | 250 billion won | 18% | 2.2x |
| Upside Case | IPO | 12.5x | 320 billion won | 25% | 2.8x |
| Downside Scenario | Secondary (Discount applied) | 8.5x | 200 billion won | 13% | 1.8x |
| Stress Case | Sale after one year of holding extension | 9.0x | 210 billion won | 11% | 1.9x |
[Key Considerations]
The key point here is to verifythat there is no principal loss even in the Stress Case. Then, determine whether the probability of the Upside Case justifies the dual-track costs (additional advisory fees, management resource allocation).
IV. Five Exit Pitfalls Encountered in Real-World Experience
These were the key lessons learned through 10 exits.
Pitfall 1: The "Just a Little Longer" Syndrome
The longer the holding period, the more sharply the IRR declines. Achieving a MOIC of 2.5x in the fourth year yields a Gross IRR of 26%, but achieving the same MOIC in the sixth year drops the IRR to 16%. The current global average holding period of 6.6 years is proof that many GPs have fallen into this trap.12
Trap 2: Valuation Anchoring
The mindset that "our assets were valued at 12x last year, so they should be valued at least 12x now" is dangerous.
Market multiples are fluid, influenced by interest rates, sector cycles, and shifts in the pool of buyers. Anchoring to past valuations causes you to miss the optimal exit window.
Pitfall 3: Initiating a sale without proper preparation
It is surprisingly common to enter the sale process without preparing for Vendor Due Diligence (VDD). Ifyou fail to organize the consistency of financial data (
), the Change of Control clauses in key contracts, and potential litigation risks beforehand, numerous factors leading to price discounts (Price Chip) will emerge during the DD process.
Pitfall 4: Misaligned Executive Incentives
If the management incentive structure at the exit point is not aligned with the sale, the deal falls through.
If management feels employment insecurity after the sale, they become reluctant to cooperate with due diligence, undermining the buyer's trust. Designing the Management Incentive Plan (MIP) to be linked to the exit is essential.
Pitfall 5: Lagging Design of the Tax Structure
The after-tax return varies significantly depending on the exit structure.
SPC structures, holding company structures, and withholding taxes on cross-border transactions mustbe designed from the investment stage, not the exit stage. Changing the tax structure at the exit stage is inefficient in terms of cost and time.
V. 2026 Exit Strategy Recommendations … Three Actionable Principles
Summarizing the core principles of exit strategies in the current market environment.13
Principle 1: Maintain an "exit-ready" state at all times.
Exit is a process, not an event. Starting in the second year of investment, build a VDD-level data room and update your exit scenarios every quarter. Readiness—the ability to complete a sale within six monthswhen the market window opens —is a competitive advantage.
Principle 2: Multi-track is not optional—it is essential.
Relying on a single exit path in the 2026 market carries significant risk. Even if the IPO market is open, companies should simultaneously explore strategic sales and secondary offerings. The additional costs of a dual-track approach (approximately 0.5–1.0% extra in advisory fees) are fully recouped by achieving the optimal exit price.
Principle 3: Proactively manage LP communication
With $3.2 trillion in unsold portfolios piling up, liquidity demands from LPs are stronger than ever. When utilizing GP-led secondaries or Continuation Vehicles, GPs must use data to convince LPs why holding these assets makes sense. Transparent communication will determine the success of the next fundraising round.
Closing Note
The true success of an investment is realized at the exit. While buying good assets cheaply is important, the essence of private equity investment lies in maximizing the value of those assets and recovering them at the optimal time and through the optimal path.
- https://www.mckinsey.com/industries/private-capital/our-insights/global-private-markets-report
https://www.mckinsey.com.br/our-insights/global-private-markets-report ↩︎ - https://www.spglobal.com/market-intelligence/en/news-insights/articles/2026/1/private-equity-exits-rise-returns-fall-in-2025-96929032
https://www.mckinsey.com/industries/private-capital/our-insights/global-private-markets-report ↩︎ - https://www.mckinsey.com/industries/private-capital/our-insights/global-private-markets-report ↩︎
- https://www.pwc.com/gr/en/advisory/deals/trends/private-equity.html
https://www.goodwinlaw.com/en/insights/publications/2026/01/insights-privateequity-whats-next-for-global-pe-in-2026
https://kearneyblog.co.kr/child/sub/insights/view.php?seq=176&ca_id= ↩︎ - https://www.vciinstitute.com/blog/exit-strategy-evolution-ipos-vs-strategics-in-2025 ↩︎
- https://www.pwc.com/gr/en/advisory/deals/trends/private-equity.html ↩︎
- https://www.mckinsey.com/industries/private-capital/our-insights/global-private-markets-report ↩︎
- https://www.vciinstitute.com/blog/exit-strategy-evolution-ipos-vs-strategics-in-2025 ↩︎
- https://www.pe150.com/p/private-equity-exits-in-2025-navigating-uncertainty-with-strategic-flexibility ↩︎
- https://www.stephensonharwood.com/insights/corporate-ma-what-opportunities-lie-ahead-in-2026/ ↩︎
- https://www.goodwinlaw.com/en/insights/publications/2026/01/insights-privateequity-whats-next-for-global-pe-in-2026 ↩︎
- https://www.mckinsey.com/industries/private-capital/our-insights/global-private-markets-report ↩︎
- https://www.goodwinlaw.com/en/insights/publications/2026/01/insights-privateequity-whats-next-for-global-pe-in-2026
https://www.mckinsey.com/industries/private-capital/our-insights/global-private-markets-report ↩︎
Leave a comment