Prepare for private equity exits with Ontra

Given a challenging private equity exit environment, PE firms are leveraging legal technology, data analytics, and AI to be ready when the right opportunity presents itself.

It’s no secret that recent years have been tough on the private markets. According to Preqin data, the value of global private equity exits hit $392.48 billion in 2024 — a five-year low — though exit volume increased by over 5%. Trade sales made up 1,177 transactions worth $193.6 billion. Secondary buyouts represented $151.1 billion, and IPOs amounted to $47.6 billion in 2024.

Industry leaders began 2025 on an optimistic note, though new economic uncertainty is impacting both GPs and LPs’ plans. As always, the private fund managers able to quickly adapt to current market conditions and ready to tell a strong equity story will be the first in line for exit opportunities. To adapt and craft strong equity stories efficiently, managers must leverage AI-powered legal tech like Ontra’s private markets technology platform.

What is a private equity exit?

An exit refers to a PE fund parting with a portfolio asset — such as through a strategic sale, IPO, or continuation fund to realize a return for that fund and its LPs.

Top private equity exit strategies include:

Strategic sale: The sale of a portfolio business to a corporate buyer, typically a business in the same industry that hopes to incorporate the target company into its business.

IPO: The placement of a company on a stock exchange for the first time and the sale of stock units to the public.

Leveraged recapitalization: The portfolio company raises debt and restructures its capital to repay loans and preference shares.

Secondary buyout: The sale of a portfolio company to another PE fund or financial sponsor.

Continuation fund: A GP-led secondary sale of a portfolio company to another fund by the same GP.

Partial sale: The sale of part of the GP’s stake in the portfolio company — usually as a secondary sale.

Reasons for the challenging exit environment

A number of factors have made exits particularly tough in recent years, including:

• High inflation squeezed profit margins and made some businesses less attractive to buyers.
• Mismatched valuation expectations between buyers and sellers make it difficult to reach a deal.
• The renewed risk of recession has made buyers cautious.
• Ongoing geopolitical tensions in multiple regions create uncertainty.

According to Preqin, the average holding period for private equity firms was 6.1 years in 2024 — higher than the average holding period between 2018 and 2022. The PE holding period was the lowest at 5.6 years in 2022.

2025 private equity exists

While 2024 was far from a blockbuster year, industry insiders saw signs of improvement. McKinsey noted a “nuanced picture” with private equity emerging “from the fog in 2024.”

Overall, the private markets entered 2025 optimistic about exits because:

• Exit transaction values increased each quarter of 2024.
• The number and value of PE deals increased — above $500 million in enterprise value.
• Financing conditions had improved slightly, and the cost of financing declined.
• Sponsors’ distributions to LPs were more than capital contributions for the first time since 2015.
• GPs had embraced new fund structures, including continuation vehicles.

Unfortunately, buyers and sellers must now address new challenges, including tariffs, a backlog of sponsor-owned companies, a volatile stock market, and economic policy uncertainty.

How are GPs preparing for exits?

Typically, GPs begin to consider an exit 12-18 months ahead of their deadline or ideal exit timeline.

Preparing for a PE exit requires an enormous amount of data collection, analysis, and documentation. To prepare a clear roadmap for a prospective buyer’s opportunity, GPs:

• Assess growth measures for the portfolio company
• Document the success of growth measures
• Consolidate data
• Demonstrate tangible EBITDA impact
• Prepare for diligence requests
• Prepare for valuation

Through these steps, a GP crafts a compelling narrative to provide prospective buyers. The equity story demonstrates the portfolio asset’s current and potential value, giving a potential buyer a clear roadmap and confidence in its ability to continue to grow and benefit from the asset.

Navigating an exit with Ontra’s AI-powered technology platform

Centralized entity management

Atlas is a modern entity management solution that consolidates entity information, creating a single source of truth to support diligence and provide information to prospective buyers.

During an exit, Atlas is a valuable tool for creating entity charts and updating director & officer (D&O) slates. By relying on Atlas’s automatically generated structure charts, GPs can visually reflect the new ownership of the underlying assets and monitor capitalization. Additionally, Atlas can help streamline diligence- and KYC-related tasks by providing swift access to an asset’s articles of incorporation, D&O slates, structure charts, and more.

Digital side letter management

Insight powers the private fund lifecycle and simplifies compliance. By digitizing side letters and other fund documents in Insight, GPs can transition to a centralized and searchable digital compendium.

GPs can review an existing LPA and side letters in Insight to determine if a particular exit strategy triggers additional obligations — such as a notice or consent requirement. In the case of a continuation fund, GPs and their outside counsel can use Insight to streamline the negotiation of new side letters, run MFN elections, and manage ongoing compliance for the new fund.

A GP acquiring a target company in a secondary transaction can use Insight to search its side letters for particular obligations and restrictions. Insight’s AI Search feature understands the intent and context of a search and forgives misspellings and typos, helping deal and legal professionals quickly surface relevant information across fund documents.

Efficient contract automation

Contract Automation is an AI-powered contract negotiation solution that streamlines the negotiation and execution of routine legal agreements, such as NDAs for an auction or new LPs joining a continuation fund. With Ontra’s Contract Automation solution, customers rely on our global Legal Network members to negotiate agreements. With Accord, customers leverage Ontra’s AI-powered contract negotiation solution in-house.

By using Contract Automation or Accord, GPs can accelerate negotiations, improve the quality and consistency of their agreements, and reduce costs. For instance, during an auction, dozens or hundreds of potential bidders must complete an NDA before accessing diligence materials. The GP or investment bank running the sale process can drastically reduce the time it or its outside counsel spends on NDAs, lower costs, and improve visibility into active counterparties using this NDA process.

Prepare for more private equity exits with Ontra

Will the industry’s optimism for 2025 be rewarded, or will economic uncertainty and market volatility hold back fundraising, deals, and exits? As of April 2025, most are taking a wait-and-see approach.

Are you ready for whatever comes next? Schedule a demo of Ontra’s AI-powered technology platform for the private markets today.