While acquisitions create the opportunity for value, it is ultimately the exit that determines whether it is realised. In our experience, many searchers spend years focused on growth without a clear plan of how they will realise the value they have worked so hard to create.

The best exits are the product of early planning, disciplined execution, and a realistic understanding of how buyers underwrite risk. Below, we outline the factors that most consistently influence exit outcomes for search funds, based on insights from our transactions experience.

Why exit planning starts on day one?

Most search funds aim for a five-to-eight-year hold period. Whilst some assets are held for longer, very few achieve optimal outcomes without at least an exit strategy in place from the outset. Importantly, this is not about locking into a single exit route. It is about understanding who is likely to buy the business and why. In practice, we see three reasons early exit thinking materially improves outcomes:

• Buyers pay a premium for de-risking

Searchers often focus on growth initiatives without addressing the factors that concern buyers most, namely; customer concentration, weak succession planning, or poor internal reporting. Businesses that grow whilst removing these risks consistently outperform at exit.

• Investors increasingly expect a credible path to liquidity

As the number of search funds has increased, so has investor selectivity. A clear plan of how capital is likely to be returned, and under what conditions, materially improves investor confidence.

• Strategic alignment avoids value leakage

Where exit expectations are unclear, we frequently see misaligned decision-making in the final years of ownership. By contrast, businesses with a shared understanding of likely exit timing tend to prioritise initiatives that buyers value, such as strengthening management depth.

When to exit

Exit timing is one of the most misunderstood aspects of the search fund model. Buyers do not pay premium multiples simply because earnings are high, they pay for confidence in future cash flows. Key considerations include:

• The most valuable growth is repeatable growth

Buyers will pay a premium for growth if that growth is sustainable. We regularly see deals stall where revenue has grown quickly but systems, controls, or management have not kept pace. In contrast, businesses with moderate growth but strong predictability often exit at higher multiples.

• Markets matter but process design matters more

Macroeconomic conditions influence buyer appetite, but they do not dictate outcomes. Well-run processes with competitive tension still succeed in weaker markets, while poorly positioned assets underperform even in strong ones. The earlier a business is prepared for sale, the more optionality management retains.

• Aligning with Internal Rate of Return (IRR) targets

Exit timing should be evaluated against the IRR hurdles that govern the Searcher’s equity participation. The Searcher typically earns their maximum equity only once these targets are achieved. Working backward from these hurdles to the required exit valuation provides a clear framework for assessing whether the time is right to sell or whether additional value creation is still warranted to optimise outcomes for both investors and the Searcher.

Exit routes - optionality with trade-offs

The three most common exit routes available for search funds are:

• Strategic buyers

Strategics can pay premium valuations, but only when there is genuine competitive tension or a clear strategic gap being filled. Without this, pricing often converges quickly towards financial buyer levels.

• Financial buyers

Private equity remains the most consistent exit route for search funds. PE buyers are comfortable underwriting management transition risk, value cash flow durability, and move quickly when assets fit their criteria.

• Management buyouts (MBO)

MBOs can work, but they tend to be more difficult due to financing constraints or misaligned valuation expectations. They are rarely the highest value option but can provide certainty where other routes might otherwise be unavailable.

Running the exit process – maintaining control

An exit process typically takes six to nine months, though it can extend beyond that. In practice, timing is rarely the main risk to a successful outcome, loss of control is. Outcomes are determined by preparation, execution and the seller’s ability to preserve leverage throughout the process.

• Due diligence delays are usually seller-driven

Loss of control most often occurs during diligence, and delays are typically seller-driven. In a search fund, the Searcher has already completed deep diligence and built a detailed acquisition model at entry. The discipline is in implementing those original diligence recommendations over time and keeping the model updated as a single source of truth. Businesses that do this enter an exit process with clean data, clear KPIs and fewer open questions. This preserves momentum, limits the risk of renegotiation after the Heads of Terms are agreed, , and maintains negotiating leverage on both timing and valuation.

• Management bandwidth is a real constraint

Running a business through a sale process is not business-as-usual. Deal momentum slows down, or even fails completely, when management attempts to self-manage a process whilst maintaining growth targets. External advisers absorb process complexity, allowing management to remain focused on the business.

• Buyer depth determines negotiating power

Control ultimately rests with the seller who has options. The strongest exits are achieved when multiple credible buyers remain engaged deep into the process. We advise searchers to consider building and maintaining relationships with potential acquirers well ahead of any formal process, ensuring leverage is available when it matters most.

Final thoughts

The most successful search fund exits are rarely accidental. They are engineered through early planning, disciplined execution and a strong understanding of buyer behaviour.

Searchers who view exit planning as an ongoing effort, rather than a final-year exercise, consistently achieve better outcomes for themselves and their investors.

If you have acquired a business and would like to discuss how we can support on executing a successful exit, please fill in the form below and someone from the team will be in touch.