Learn how to measure and communicate the value and influence of your exit on the industry using benchmarks, competitors, outcomes, stories, and transparency.

When I decided to step away from my business, it was crucial for me to figure out how it affected the other players in the industry. I wanted to see if my departure changed things like the market share, strategies, and overall position of my competitors. It was a bit like a puzzle – understanding the ripple effect. I recall leaving my business in the healthcare sector, and it was fascinating to witness how the industry scaled up and became more efficient after my exit. This personal experience emphasized the importance of evaluating not just my own journey but also the impact it had on the broader competitive landscape.

What is the best way to evaluate the impact of an exit on the broader market?

When you sell a portfolio company in private equity, you not only generate returns for your investors, but also create ripple effects in the market. Depending on the size, sector, and timing of your exit, you may influence the valuation, competition, and innovation of other players in the industry. How can you measure and communicate the impact of your exit on the broader market? Here are some tips to help you.

1 Use benchmarks

One way to assess the impact of your exit is to compare it with similar deals in the same sector or region. You can use benchmarks such as multiples, growth rates, and margins to see how your exit performed relative to the average or median. You can also look at the trends and drivers of the market to understand the context and rationale of your exit. For example, if you exited a fintech company in a booming market, you can highlight how your exit contributed to the sector's growth and innovation.

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Anshul Garg, CFA

Vice President | Growth Investing (PE / VC) | M&A
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Benchmarking exit multiples with peers might give you directional ranges but it might not be conclusive. Market timing is key. Cycles turn quickly and hence there are a lot of other variables at play such as - overall market sentiment and sector trends in target markets - type of deal (strategic investor vs PE/VC deal) - power of scarcity (unique company for sale vs multiple targets available) - dry powder available (idle cash sitting to be deployed vs difficult fund raising environment) - financial position of the company (distress, exponential growth, dividend play) - shareholders situation (conflict, non core business, exit for cash)

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Tameezuddin Siddiqui

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Multifaceted exit analysis: Powerful for understanding broader impact, but requires effort (data, expertise) and nuance (subjectivity, consider other factors like regulations/tech). Balance by: Specificity: Show how to apply benchmarks, analyze competitors, and assess market context (examples, case studies). Transparency: Explain assumptions used in comparisons and trend identification. Openness: Acknowledge other potentially relevant factors (regulations, tech) for further investigation. This concise summary captures the balanced analysis while remaining brief.

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2 Analyze competitors

Another way to evaluate the impact of your exit is to analyze how it affected the competitive landscape of the industry. You can examine how your exit changed the market share, positioning, and strategy of your competitors. You can also identify the opportunities and threats that your exit created for them. For example, if you exited a healthcare company in a consolidating market, you can show how your exit increased the scale and efficiency of the industry.

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Momen Elsady

Wealth Management Expert | Financial Strategist | Advanced Options Trader
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When I decided to step away from my business, it was crucial for me to figure out how it affected the other players in the industry. I wanted to see if my departure changed things like the market share, strategies, and overall position of my competitors. It was a bit like a puzzle – understanding the ripple effect. I recall leaving my business in the healthcare sector, and it was fascinating to witness how the industry scaled up and became more efficient after my exit. This personal experience emphasized the importance of evaluating not just my own journey but also the impact it had on the broader competitive landscape.

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3 Track outcomes

A third way to measure the impact of your exit is to track the outcomes and results of your portfolio company after the sale. You can monitor how the company performed under the new ownership, such as its revenue, profitability, and market expansion. You can also follow how the company continued or changed its mission, vision, and values. For example, if you exited a social enterprise in a niche market, you can demonstrate how your exit sustained or enhanced the company's social impact.

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4 Share stories

A fourth way to communicate the impact of your exit is to share stories and testimonials from your stakeholders. You can collect feedback and insights from your management team, employees, customers, suppliers, and partners. You can also showcase the achievements and challenges that you faced during your ownership period. For example, if you exited a consumer goods company in a competitive market, you can tell how your exit rewarded and recognized the efforts and loyalty of your stakeholders.

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5 Be transparent

A fifth way to convey the impact of your exit is to be transparent and honest about your exit process and results. You can disclose the key facts and figures of your exit, such as the deal value, return multiple, and holding period. You can also acknowledge the risks and uncertainties that you encountered or expect to face after the exit. For example, if you exited a technology company in a volatile market, you can admit how your exit reflected or adjusted to the market conditions.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What is the best way to evaluate the impact of an exit on the broader market?

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1 Use benchmarks

2 Analyze competitors

3 Track outcomes

4 Share stories

5 Be transparent

6 Here’s what else to consider

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